Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

Oral Answers to Questions — NORTHERN IRELAND

Housing (Heating Systems)

Mr. Powell: asked the Secretary of Stae for Northern Ireland if he will now approve the proposal of the Housing Executive to offer the alternative of solid fuel heating to tenants with all-electric heating systems.

The Under-Secretary of State for Northern Ireland (Mr. Ray Carter): Consultations have been taking place on a proposal by the Housing Executive to undertake a programme of providing facilities for solid fuel heating in houses at present fitted with all-electric systems. In the light of the results of those consultations I can now confirm that my right hon. Friend the Secretary of State has decided in principle that wherever this is practicable Housing Executive tenants should be offered solid fuel heating as an alternative to all electric heating systems.

Mr. Powell: May I assure the Minister that that news will be received with satisfaction by a great many, including some of the poorest people in Northern Ireland, and that the wisdom of this decision is in no way affected by the outcome of any further decisions which may be taken on the supply of electricity and gas in the Province?

Mr. Carter: I welcome the right hon. Gentleman's support of the changes that we intend to make. However, whatever decisions we take in this matter must be consistent with other decisions that we are taking on energy questions generally in Northern Ireland.

Rev. Ian Paisley: Is the Minister aware that the installation of solid fuel fires in one of my constituency districts, Carrickfergus, has been disastrous, in that the fires have not been up to standard? Will he take immediate steps to have this matter remedied? Will he also inquire whether the fires were substandard and rejected by the housing authorities in England?

Mr. Carter: I take note of what the hon. Gentleman said. This is the first I have heard about it. By and large, where the Housing Executive has moved in the general direction supported by the right hon. Member for Down, South (Mr. Powell), most people have been satisfied with what we have done. But I shall look into the question that the hon. Gentleman raises.

Mr. Ron Thomas: Does not my hon. Friend feel that this Question and a number of others are rather bizarre, and show a sign of political schizophrenia, when they are put down by people demanding more public expenditure who went into the Lobbies last night supporting massive tax handouts to a very small number of wealthy people in this country?

Mr. Carter: My hon. Friend is quite right. As with any other item of public expenditure, we shall have to take decisions within the next 12 months in the light of what the House decides in the course of the next few weeks, or days.

Trade Unions

Mr. Canavan: asked the Secretary of State for Northern Ireland when he next expects to meet representatives of trade unions in Northern Ireland.

The Minister of State, Northern Ireland Office (Mr. J. D. Concannon): Northern Ireland Ministers are in constant touch with representatives of the trade unions in Northern Ireland in the course of our ministerial duties and departmental responsibilities. Meetings with trade unions representatives both at ministerial and official levels are arranged as and when the need arises.

Mr. Canavan: As considerable concern about unemployment is being expressed this week at the Northern Ireland conference of trade unions, will my right hon. Friend take this opportunity of reminding the trade unionists that their


biggest enemies are the Ulster Unionists, who voted last night and earlier this week in favour of massive tax handouts to the rich, which will make it far more difficult for the Government to direct increased public expenditure to provide jobs in areas such as Northern Ireland?

Mr. Concannon: After my right hon. Friend the Secretary of State and I have been travelling the world looking for employment opportunities for Northern Ireland, and when the House and the Government have been financially very generous towards Northern Ireland, I find it hard at times to understand how some of these decisions are taken.

Mr. Hardy: Will my right hon. Friend also explain to the trade unionists that the public sector borrowing requirement cannot be allowed to reach unlimited proportions? That being so, the decisions to which my hon. Friends the Members for Bristol, North-West (Mr. Thomas) and West Stirlingshire (Mr. Canavan) have referred are clearly very relevant. Will my right hon. Friend ensure that that delegation is acquainted with the way in which each Northern Ireland Member cast his vote?

Mr. Concannon: People in Northern Ireland are very well aware of political matters, and I am sure that they understand from what was said in the debate that the Northern Ireland Members were taking their decision not for fiscal reasons but purely on political grounds.

Terrorist Organisations

Mr. Molyneaux: asked the Secretary of State for Northern Ireland whether he is satisfied with measures designed to counter co-operation between the Provisional IRA and international terrorist organisations.

The Secretary of State for Northern Ireland (Mr. Roy Mason): Yes, Sir. We are alert to any such contacts, but there is no evidence of a significant international link.

Mr. Molyneaux: Will Her Majesty's Government consider approaching the Italian Government to persuade the Government of the Irish Republic to align themselves with civilised States by signing the European Convention on the Suppression of Terrorism, and perhaps

also seek to convince Dublin that international terrorism knows no frontiers?

Mr. Mason: I think that the Government of the Republic recognise that terrorism has no frontiers and that they are fully acquainted now with Her Majesty's views on the need to enact the Convention.

Mr. Bradford: Is the right hon. Gentleman aware that the IRA has consulted terrorist organisations on the Continent? Will he not be content merely to condemn such actions but apprehend those who have participated in those conferences when they seek to return to the Province?

Mr. Mason: The appalling record of the Provisional IRA within the Province and its lack of political support do not enable it to establish any significant international links. Although some organisations have made their way to Northern Ireland—to the anti-repression conference, for example—in the course of this year, nothing of any significance came out of it.

Mr. Marten: Does the right hon. Gentleman realise that it is very worrying when he says that there is no evidence to show an international connection? Did he see a television film on training in Beirut, when a member of the party being trained said that he had come from the IRA?

Mr. Mason: I hope that the House will remember the words that I used. I said there were "no significant international links". Although contacts may be made, they are not of any significance. Although in the past there may have been a contact with Palestinians, there is no real link with the Palestinian terrorists.

Mr. Fitt: Whilst recognising and deploring almost every action of the IRA—[HON. MEMBERS: "Almost?"]—every action of the IRA, may I ask my right hon. Friend whether he agrees that there was an IRA in Ireland before there were terrorists in Italy, Germany and elsewhere, and that the existence of these organisations in those countries has nothing to do with the birth or continuation of the IRA?

Mr. Mason: I think that my hon. Friend makes a valid point when he points out the years during which the


IRA has been in existence compared with the Red Army Faction or the Baader-Meinhof gang. Secondly, it is not the IRA to which we apportion much of the blame for the troubles in Northern Ireland; it is the Provisional IRA, which continues this type of guerrilla warfare when the IRA itself ceased firing some time ago.

Mr. Speaker: Before I call the next Question, may I point out that the Secretary of State made an inadvertent slip when he said, in reply to the hon. Member for Antrim, North (Mr. Molyneaux) "Her Majesty's views"? I know that he meant "Her Majesty's Government's views." I say that just for the record.

Mr. Mason: I hope that Her Majesty does not mind.

Republic of Ireland

Mr. Flannery: asked the Secretary of State for Northern Ireland if he has any plans to hold further discussions with representatives of the Irish Government.

Mr. Mason: I went to Dublin last Friday accompanied by my hon. Friend the Minister of State, Foreign and Commonwealth Office, and met the Foreign Minister, Mr. O'Kennedy, and other Ministers of the Irish Republic. We had a most useful exchange of views in a cordial atmosphere. With permission, Mr. Speaker, I will publish the full text of the agreed communique in the Official Report.
I am sure that each side now has a better understanding of the other's approach to the long-term future of Northern Ireland. In the shorter term, we agreed to encourage the political parties in Northern Ireland to come together in a system of devolved government based on the principle of partnership which both sections of the community could support and sustain. On security, we agreed to continue to work together, exchange information and co-ordinate our efforts in the fight against terrorism, which we both regard as our common enemy. On economic matters, we endorsed, and agreed to make public shortly, the recommendations of the steering group set up after last September's meeting between my right hon. Friend the Prime Minister and the Taoiseach.
I have agreed with Mr. O'Kennedy that we will maintain contact on these matters and will meet again as necessary.

Mr. Flannery: I am grateful to my right hon. Friend for that detailed answer. Will he accept that when I tabled my Question I was not aware that he was to visit the Irish Government? Could he dilate a little on the question of the differences between the present Irish Government and the previous one? The present Irish Government had a political platform which at least tended towards some discussion of the ultimate withdrawal of British troops from Northern Ireland at some unspecified and distant date. In the discussions, was this mentioned at all?

Mr. Mason: No mention whatever was made of a military withdrawal. I hope that that gives my hon. Friend the assurance that he wants.

Mr. Neave: Has the right hon. Gentleman read Mr. Lynch's speech of 27th April? Was it discussed at the Dublin talks? In that speech, Mr. Lynch justified the Republic's refusal to sign the European Convention on the Suppression of Terrorism. Is the right hon. Gentleman aware that if anything constructive and concrete is to come out of these talks, there must be a change of heart on the question of extradition? Has he read in the newspapers today a report that the SAS is to be withdrawn from Northern Ireland and that this was part of the conversations in Dublin? Will he discount that report?

—Mr. Mason: On the subject of extradition, I have explained to the House many times before where Her Majesty's Government's interests lie, and I am sure that the Government of the Republic has understood it from the outset. We did discuss this matter in Dublin. The Dublin Government have a constitutional difficulty, which they asked us to recognise. They hope, and so do we, that the Criminal Jurisdiction Act 1976 shall operate more effectively and that we will be able to tackle terrorism on both sides of the border in that way. The SAS was not mentioned throughout the discussions.

Mr. Powell: Is the right hon. Gentleman aware of the satisfaction with which the presence of a representative of the


Foreign and Commonwealth Office on his visit to Dublin was noted as evidence that this was a visit from the representatives of one sovereign Government to those of another, and that no other Government or country has any right or standing in the constitutional arrangements of the United Kingdom?

Mr. Mason: The right hon. Gentleman is quite right to draw the attention of the House to that point. We had a Minister from the Foreign and Commonwealth Office present because we were talking about a border which is a United Kingdom border, and if we are talking about economic cross-border co-operation, it is across a border which belongs to the United Kingdom as well as to the Republic.

Mr. McNamara: Will my right hon. Friend tell the House how many applications have been made by both Governments for the implementation of the Act to deal with terrorism in either part of Ireland? Will he consider publishing in the Official Report an account of those European countries which have signed the Convention on the Suppression of Terrorism and how many, having signed it, have entered derogations, particularly on the question of political offences?

Mr. Mason: It is possible for some of the European Governments to ratify the Convention with reservations. Her Majesty's Government are going to ratify without reservations. That is the only way we can develop, throughout Western Europe, a watertight system against the movement of terrorists from country to country. It would not serve any purpose, even if the Republic decided to sign and ratify the Convention, for it to put in reservations. In the end the Convention would be like a colander.

Mr. Fitt: In connection with that part of the discussion on trying to find a devolved form of government in Northern Ireland which would allow both communities to participate—on which, it appears, the Irish Government agree—will my right hon. Friend confirm that it is still the intention of this Government to try to find power-sharing initiatives in Northern Ireland, even to the extent of his standing up to the wrecking tactics of the Unionists from Northern Ireland who are trying to wreck the economy of

the United Kingdom in the hope that it will force the Government to give them back their local authorities in Northern Ireland?

Mr. Mason: We both agreed, first, that the short-term way forward was to develop a form of partnership government in the Province that would allow the minority to participate on a fair basis. Secondly, we agreed that we had to recognise that in Northern Ireland there are two national aspirations. One of them believes in Irish unity and the other believes that Northern Ireland should remain a part of the United Kingdom. The Government of the Republic understand to the full that when they talk about Irish unity they must remember that it has to be based on agreement with and consent of the majority of people in the Province.

Following is the text of the communique:
The Secretary of State for Northern Ireland, the Rt. Hon. Roy Mason, MP, and the Minister for Foreign Affairs of Ireland, Mr. Michael O'Kennedy TD, met today for discussions at the Department of Foreign Affairs in Dublin. The meeting was one of a series of regular contacts established by the British and Irish Governments to exchange views on matters of mutual interest. Mr. Mason was accompanied by the Minister of State at the Foreign and Commonwealth Office, Mr. Frank Judd MP, Mr. O'Kennedy was accompanied by the Minister of State at the Department of Foreign Affairs, Mr. David Andrews TD, and the Minister for Justice, Mr. G. Collins TD, and the Minister for Economic Planning and Development, Dr. M. O'Donoghue TD, also took part in the talks.
The discussion, which lasted 4½ hours, covered a wide range of topics including the political situation in Northern Ireland, security co-operation, economic co-operation.
It was acknowledged that there was a difference of approach between the British and Irish Governments towards seeking a basis for a long term lasting peace and stability in Northern Ireland. Ministers were, however, in complete accord about the need to make political progress in the short term and agreeed to encourage the political parties in Northern Ireland to come together in a system of devolved Government based on the principle of partnership which both sections of the Community could support and sustain. It was accepted that political progress in Northern Ireland required that the political parties there accept that this was the way forward and work together to achieve it.
On security it was agreed that the British and Irish Governments would continue to work together, exchange information and co-ordinate their efforts to ensure the maximum efficiency of the common fight against


terrorism. The Ministers noted with satisfaction the effective and constantly developing co-operation between the Gardai and the RUC.
The Ministers received and endorsed the recommendations of the reports of the steering group set up, following the meeting in September 1977 between the Prime Minister and the Taoiseach, to review the arrangements and opportunities for economic co-operation with particular reference to Northern Ireland.
The reports, which will be made public shortly, review the extensive economic contacts which exist at present, identify areas where co-operation could be improved and recommend specific projects for detailed studies.
The Ministers announced that there would be an early application for EEC funds with a view to starting a study of the Erne catchment area. The study was a major proposal contained in the report and followed an initiative by local authorities on both sides of the border. Consultants would be employed to assess and report on the development potential of the Erne catchment area with reference to the development of tourism amenities in matters such as accommodation, access and marketing and the development of land resources through arterial drainage.
It was also agreed by Ministers that the joint steering group would meet later this year to review progress on economic co-operation generally.
The Ministers agreed that the discussion had provided a useful opportunity to exchange views on matters of short and long term interest and that they would maintain contact on these matters and meet again as necessary.

Representation of the People

Mr. Gow: asked the Secretary of State for Northern Ireland when he expects to publish the Bill to give effect to the recommendation of the Speaker's Conference on Electoral Law for the increase in the number of parliamentary constituencies in Northern Ireland.

Mr. Farr: asked the Secretary of State for Northern Ireland what effect the passage of a Bill implementing the recommendations of Mr. Speaker's Conference will have on the need for a devolved form of government in Northern Ireland.

Mr. Mason: The Bill will be published in the normal way at the time of First Reading. That will be, as my right hon. Friend the Prime Minister told the House on 19th April, as parliamentary circumstances permit. The Bill will have no effect on the need for a devolved form of government in Northern Ireland. It remains the Government's aim to establish a system of devolved government in

Northern Ireland in which representatives of both sides of the community can participate on a fair basis.

Mr. Gow: Would it not be a welcome change for the Government to introduce a Bill into this House which had the support of my right hon. Friend the Leader of the Opposition, of the Leader of the Ulster Unionist party and of the Leader of the Liberal Party? Since there will be support from the Opposition side for such a Bill, why will not the Secretary of State introduce a Bill forthwith to put right an injustice which Northern Ireland has suffered for too long?

Mr. Mason: For the main reason that there is already a packed legislative programme for this Session and, therefore, we could not fit it in.

Mr. Farr: As the Bill is regarded by hon. Members on each side of the House as being extremely important and a matter of great concern, will the Secretary of State tell the House whether it is his intention to see the Bill through this Session?

Mr. Mason: I cannot express any intention on that. It will depend upon the House itself. Irrespective of whatever all-party support it has—and I am pleased about that—we have to remember that this is a major constitutional Bill. It would have to be taken on the Floor of the House and it might take a lot more time than the hon. Gentleman suggests.

Mr. Goodhart: If all the technical problems could be removed, would the Secretary of State like to see the Bill on the statute book this Session?

Mr. Mason: There is no reason why work should not proceed on the basis of the Speaker's Conference. The Boundary Commissions can, if they wish, carry out preparatory work now, based on 17 seats, so that once the Act is on the statute book they will be in a position to make recommendations fairly quickly.

Mr. Biggs-Davison: Does the Secretary of State realise that he has not answered the questions put by my hon. Friends? Is there not a risk of the Government appearing cynically opportunist in the matter?
In view of the offer by my right hon. Friend the Leader of the Opposition of


bipartisan help with the legislation, would the Secretary of State care to talk to us about ensuring its early passage in the present Session of Parliament? There need be no delay and there need be no embarrassment to the Government's legislative programme.

Mr. Mason: I am sorry to disappoint the hon. Gentleman if he thinks that he is being misled, but it is not within my hands. Even if the Opposition offered time, they cannot know at this stage how much time the Bill might take on the Floor of the House. Because of all-party support it would no doubt get through Second Reading, but a major constitutional change of this sort would necessitate a lot of discussion in Committee.

Mr. Freud: Is the Secretary of State aware that he need not wait for a report from the Boundary Commission but could achieve the implementation of the recommendation of the Speaker's Conference by agreeing to hold an election now for the extra seats, using proportional representation?

Mr. Mason: The hon. Gentleman is now making one controversial subject doubly controversial. We already have the system of the single transferable vote in Northern Ireland, uniquely different from the system in the rest of Great Britain, and it would involve another major constitutional change if we were to talk about PR for electing Northern Ireland Members of this House.

Mr. McNamara: Does my right hon. Friend agree that it is rather surprising that we have had this sudden demand for these extra seats from the Opposition parties?

Mr. Farr: Sudden?

Mr. McNamara: The Conservatives introduced direct rule and could have made provision then for these extra seats had they wanted to do so. They did not do so because they wanted a devolved form of government. Should not our aim be to bring the people of Northern Ireland together to co-operate peacefully before we start extending representation?

Mr. Mason: I suppose that my hon. Friend would look at the Opposition and think that there is some political opportunism in this. They had the opportunity

for many years when they were in office and they did not take it. The House must recognise that, once it had been said that after devolution in Scotland and Wales their present parliamentary representation would continue, the disparity between Great Britain and Northern Ireland was further highlighted. All we are doing is to give Northern Ireland, on a fair and just basis, its right parliamentary representation.

Security

Mr. Biggs-Davison: asked the Secretary of State for Northern Ireland if he will make a statement on the security of the Province.

Mr. Mason: Since 13th April, when I last addressed the House, five persons, including three members of the security forces, have died as a result of terrorist violence. In the same period, 84 people have been charged with serious terrorist crimes, including eight with murder and seven with attempted murder. Recoveries of arms and munitions continue on a large scale, including finds of Armalite rifles and a haul of cassette incendiary devices.
The security forces continue to operate efficiently and with success in the prevention and detection of crime. The men of violence must surely be aware of the futility of their actions and the certainty of their capture.

Mr. Biggs-Davison: Will the right hon. Gentleman convey our congratulations to the Royal Ulster Constabulary on its success in bringing so many gangsters to book? But is not full success being impeded, as earlier exchanges have indicated, by the asylum still available in the Republic? Would the right hon. Gentleman now care to answer the supplementary question from his hon. Friend the Member for Kingston upon Hull, Central (Mr. McNamara)? Since Mr. Lynch has complained that the United Kingdom has not invoked the criminal jurisdiction legislation to which the Secretary of State's hon. Friend referred, can we be told when the first case is likely to be attempted thereunder?

Mr. Mason: Of course, the border is an ingredient in the terrorist activity in the Province, and it is also an ingredient in criminal activity North and South.
Under the provisions of the Criminal Jurisdiction Act 1976, first there have to be acts of a terrorist nature which have taken place since June 1976, so that it is a relatively short time. Secondly there is a problem, which I hope we shall be able to overcome. It is that the information that the Royal Ulster Constabulary may pass to the Garda is not sufficient in detail for it to be regarded as evidence before a court of law. This makes it a little more difficult to get the number of arrests and detentions by the Government of the Republic—and vice versa by ourselves—that we would like. So far there has been the case of Captain Nairac, who died in the South. Three men are being held and charged in the North. One of the persons involved in that matter was from the South and he has since been charged in the South.

Mr. Wm. Ross: When the right hon. Gentleman saw the members of the Republic's Government recently, did he draw their attention to the amount of terrorism which is planned in and launched from the Republic and point out that he believes that this is far greater than the 2 per cent. which the Republic would admit?

Mr. Mason: We did not talk about percentages. I hope that getting down to that sort of percentage detail will not be necessary any more. We talked about expanding co-operation between the North and the South, tackling terrorist activity on both sides of the border, and of the Government of the Republic and Her Majesty's Government co-operating and developing that sort of anti-terrorist activity. As an indication of this, we have now agreed that the Chief Constable from the Royal Ulster Constabulary and the Garda Commissioner shall meet very shortly to develop some of the views that we exchanged on security matters in the whole of Ireland.

Mr. Watkinson: All hon. Members will welcome the developments which have taken place between North and South. Can my right hon. Friend say that there will be closer links between the Armed Forces of both North and South in improving anti-terrorist methods in the border area? Will he also say whether he regards home-made machine guns as a growing threat in the North at the present time?

Mr. Mason: My answer on the latter point is "No". Although small submachine guns are being found in Northern Ireland during the course of RUC raids, we do not regard the home-made manufacture of them as a serious threat. Army co-operation between the North and the South is more difficult because of the history of the Irish Army and ourselves. We are getting good co-operation with the RUC. That is the area where we should develop it. The Irish Army is helping as much as it can on the border, but communications between the British Army and the Irish Army remain difficult.

Rev. Ian Paisley: Is the right hon. Gentleman aware that the Foreign Secretary of the Republic stated on Sunday that the right hon. Gentleman did not ask him for assurances on the question of security and that no assurances were given? In view of the communiqué which has been issued, this matter is bewildering to the people of Northern Ireland. As to the arms find, can the Minister tell us the origin of manufacture of these arms?

Mr. Mason: As the hon. Gentleman will know, some of the arms have come from the Middle East. There is no significant link between terrorist activity in Northern Ireland and the Middle East, but it is easy to buy illegal arms in that area. I assure the hon. Gentleman that the Republic made me completely aware that it now has a 100 per cent. commitment behind its security forces in tackling terrorism in the South and helping us along the border.

Regional Government

Mr. Michael McNair-Wilson: asked the Secretary of State for Northern Ireland what measures he intends to take to increase democratic representation in the Province at regional level.

Mr. Mason: I have already put to the main political parties in Northern Ireland a framework for the establishment of a single elected authority at regional level. I set out some of the essential principles of the framework in replies which I gave on 7th April to two Questions from my hon. Friend the Member for Leeds, South-East (Mr. Cohen).

Mr. McNair-Wilson: How much longer will the Secretary of State be satisfied to leave Northern Ireland without


proper democratic control over its local services? Is it not time that he set up a new study into the right structure of local government for the Province, particularly as direct rule looks likely to continue for longer than most people imagined?

Mr. Mason: If the political parties in Northern Ireland will examine more closely the five-point plan for devolution in Northern Ireland, they will see that I shall give the locally elected representatives the right democratic control over many of the services to which the hon. Gentleman referred. I hope, therefore, that they will be prepared to look again at that plan.

Mr. Neave: Will the Secretary of State be a little more specific in replying to my hon. Friend the Member for Newbury (Mr. McNair-Wilson)? Surely he will agree that it is no longer satisfactory for Ministers to be responsible for local government matters winch were dealt with by county and district councils prior to 1973. Does he not also agree that a top tier of local government could best control some of the functions now exercised by area boards and his Department? Would not the best system be one whereby both sections of the community from all political parties could administer local affairs?

Mr. Mason: It depends what the hon. Gentleman means by "local government". To have a British style of local government in Northern Ireland would mean the restoration of Protestant rule in the Province. If power is transferred to the Province on that basis, therefore definitions matter. The five-point plan that I have laid before the community is a plan for a transfer of real powers back to Northern Ireland and for control to be by democratically elected representatives. That will pass the acceptability test of the House and the acceptability test of our bi-partisan policy. It is important to get the definitions right. I want to establish a partnership administration within the Province.

Mr. Neave: Surely the Secretary of State is talking about a regional council to which all political parties in Northern Ireland would be elected. Therefore, could not the two sections of the community be represented through a committee system, and so participate in local affairs, as they did prior to 1973?

Mr. Mason: We have 26 district councils in Northern Ireland which are democratically elected. Between the district councils and Westminster representation there are the area boards, which have elected councillors on them, along with other professional organisations. If the various parties in Northern Ireland can reach an agreement and are willing to talk and to work together on a regional authority in which the minority will be able to participate, we can see some of those boards having their work taken from them and put completely in the hands of the democratically elected representatives.

Mr. John Ellis: Will my right hon. Friend resist the pressures that are being exerted on him? Does he agree that one of the main criteria must be that any move in this direction must have the acceptance of both sides of the community of Northern Ireland? Will he comment on the crass tactics of the Unionists, of trying to twist the Government's arm by withholding their support? To do it in this manner by hammering us is likely to alienate some Labour Members, rather than otherwise.

Mr. Mason: My hon. Friend makes that point with force and vigour. I could equal it. It is satisfactory to say that our policy has not changed. If we want to go down the path of devolution in Northern Ireland, it will be with the participation of the minority of the community.

Maze Prison

Mr. James Lamond: asked the Secretary of State for Northern Ireland if he will order an inquiry under Section 7 of the Prison Act (Northern Ireland) 1953 into the conditions of prisoners in H Block of the Maze Prison.

Mr. Concannon: No, Sir.

Mr. Lamond: Is my hon. Friend aware of the concern that has been expressed by the Northern Ireland Civil Rights Association about the conditions affecting all prisoners in this type of block? Is he satisfied that his Department could meet any criticisms that might come from an international inquiry into conditions there from such a body as, say, the Red Cross?

Mr. Concannon: I am satisfied that the prison conditions provided in the H block units in the Maze are amongst the best in the United Kingdom. The units cost over £1 million each. Associated with them are recreational facilities that include a £100,000 indoor sports hall and two all-weather sports pitches. By observing the rules, through working and wearing prison clothes, prisoners can have weekly visits and can wear their own clothes, of an approved type, during recreational periods or when seeing their visitors. These are privileges which are not allowed in the rest of the United Kingdom.
The protests consist of some prisoners deliberately setting out to create bad conditions out of good conditions and then to make propaganda out of those conditions. Of the 300 prisoners who urinate, smear the walls of their cells with excreta, break up their furniture and take the springs out of their beds, 74 have been convicted of murder or attempted murder, 80 of firearms offences, and 82 of explosives offences, including 47 of causing explosions.

Mr. McCusker: Is the right hon. Gentleman aware that he has the complete support of my right hon. and hon. Friends for the stand that he is taking against this protest? Will he take this opportunity to deny the suggestion made by a former Member of the House, Mrs. Bernadette McAliskey, that in the near future he will be forced by the International Red Cross to give these gangsters prisoner-of-war status?

Mr. Concannon: There is a Question on the Order Paper about the status of these prisoners. It would be better if I waited until that Question was reached.

Mr. Biggs-Davison: Is the right hon. Gentleman aware that he and the Government, and the prison service, have our full support in resisting these attempts to persuade the Government to revive the political category status in Her Majesty's prisons in Northern Ireland?

Mr. Concannon: I thank the hon. Gentleman for his support. This is the newest prison built in the United Kingdom and it was built after a lot of thought and deliberation. With its accommodation, and everything else, I am sure that those who have seen it at first hand will agree

that it is one of the best prisons in the United Kingdom.

Job Creation

Mr. Bradford: asked the Secretary of State for Northern Ireland if he will make a statement on the job opportunities created in West Belfast and other areas of high unemployment in Northern Ireland since the beginning of direct rule.

Mr. Concannon: Since 1st April 1972 which is the nearest convenient date to the beginning of direct rule for which job promotion statistics are available, a total of about 33,000 jobs have been promoted in the Province through the joint efforts of the Department of Commerce, the Local Enterprise Development Unit, the Northern Ireland Finance Corporation and the Northern Ireland Development Agency. Of this total, approximately 9,500 jobs have been promoted in the four areas of Northern Ireland where local unemployment rates have been, and indeed still remain, the highest—namely, Strabane, Londonderry, Newry and West Belfast.
The unemployment rate in Northern Ireland as a whole, as at 13th April 1978, was 11·8 per cent.

Mr. Bradford: Does the right hon. Gentleman accept that the Rev. Padrig Murphy's bitter criticism of the Labour Party's performance in respect of job provision in West Belfast is as un founded as was his criticism of the former Northern Ireland Parliament? Will the Minister also accept that, if Padrig Murphy is really interested in providing jobs for West Belfast, he will help to stifle the IRA by refusing to give murderers the comfort and succour of the Church?

Mr. Concannon: In the Department of Commerce, I am interested in jobs for the whole of Northern Ireland. The Question relates only to West Belfast. I have told representatives from West Belfast that the best way they can help themselves would be to clear their image in the rest of the world.

Mr. Fitt: Does my right hon. Friend accept that it is grossly impudent for the hon. Member for Belfast, South (Mr. Bradford) to raise this matter in such a sectarian and biased way and to use the


Question to make an attack on a prominent member of the Catholic Church in West Belfast? Is he aware that in my constituency of West Belfast there is an electorate of 67,000 and that 10,000 people are unemployed? Whatever jobs may have been created, they have proved not to be adequate. Will my right hon. Friend give an indication to the House that he will devote more attention, in co-operation with the trade union movement and the public representatives of West Belfast, to try to do away with the despair that exists there?

Mr. Concannon: West Belfast receives the highest rates of incentives, which are very generous in Northern Ireland. I cannot split the figures as my hon. Friend does, because I can take only the figure for the travel-to-work area of Belfast. That figure is 9 per cent., but I know that unemployment in West Belfast is higher than that.
The best way for West Belfast people to help—because I cannot direct industries to go there—is in relation to their image throughout the world. When industrialists decide on an area in Northern Ireland, I can assure my hon. Friend that West Belfast is not top of the list.

Procat Engineering, Castledawson

Mr. Dunlop: asked the Secretary of State for Northern Ireland what steps have been taken to persuade Procat Engineering to remain in Castledawson, County Londonderry, rather than to transfer its activities to the Irish Republic.

Mr. Concannon: I understand that when the company's premises were sold the local enterprise development unit, which has in the past given considerable financial assistance to the company, offered to help it to find alternative accommodation. However, this offer was not taken up by the promoter. I have no information that would confirm that the company has been offered a factory in the Irish Republic.

Mr. Dunlop: I thank the right hon. Gentleman for his reply and explanation. Has he any contingency plans for filling the vacuum caused by the withdrawal of this factory and the consequent loss of jobs in south Londonderry?

Mr. Concannon: No matter how hard the Department or I try, we cannot stop factories changing their location. This company's problems over the factory arise from the promoter's decision to dispose of the factory that the company occupies. I found that hard to take, and I am sure that the hon. Gentleman will feel the same way.

Prison Rules (Breaches)

Mr. Craig: asked the Secretary of State for Northern Ireland if he will review the punishment and penalties in respect of offences against the rules of conduct in Her Majesty's prisons and in respect of attempts to disrupt the efficient and orderly running of those prisons.

Mr. Concannon: I see no need for any such review. I am satisfied that the provisions of the Prison Rules (Northern Ireland) 1954 are adequate to deal with all aspects of the current protest.

Mr. Craig: Is the Minister aware that this concerted campaign by some prisoners to have the special category status restored has resulted in many of them losing their full rights to remission and that, therefore, an important deterrent in prison discipline has thereby gone?

Mr. Concannon: That is a fact. For every day that they are not abiding by prison rules, they lose a day's remission. Some have gone past their early release date and are keeping themselves in prison much longer than necessary. From some of the statistics I have read out, I do not think that that is a bad thing.

Mr. Carson: Is the right hon. Gentleman aware that there is grave concern among the relatives of Loyalist prisoners in the Maze and Crumlin Road prisons that Republican prisoners are being served food in their cells and that the Northern Ireland Office or the prison authorities are discriminating against Protestant Loyalist prisoners by refusing to serve food to them in their cells during a 23-hours-a-day lock-up?

Mr. Concannon: It is important for the House to understand that I do not have Loyalist or Republican prisoners. I have only convicted prisoners. It is not for me to segregate these prisoners. All the conditions that they are complaining


about are being brought about by themselves and the voluntary segregation in the prisons.

Rev. Ian Paisley: Is the right hon. Gentleman aware that some Protestant prisoners—and all prisoners in Northern Ireland are segregated by their religious standing—have not been served any prison food for 14 days for the simple reason that they will not go to the dining accommodation because of threats by the majority of prisoners who are unregistered as Roman Catholics? Will he give an assurance that these men will have the same privileges as those in the "no wash" campaign and will have food served in their cells?

Mr. Concannon: Some prisoners are refusing to go to the dining rooms, but that does not mean that they are going without food. I can only reiterate that if we started segregation it would be the first step back to special category status, and that is a step that I am not prepared to take.

Oral Answers to Questions — TUC AND CBI

Mr. Joseph Dean: asked the Prime Minister when he next plans to meet the Confederation of British Industry.

The Prime Minister (Mr. James Callaghan): I met representatives of the CBI on 6th February and further meetings will be arranged as necessary.

Mr. Dean: When my right hon. Friend next meets the leaders of the CBI, will he remind them of the substantial financial assistance that members of the CBI in Northern Ireland and Scotland receive from the Government? How does he relate this to the members of the CBI from those areas who this week have induced Unionist and SNP Members to vote against the Government in an attempt to wreck their financial and economic strategy? Is it not time that the situation in relation to these two areas of the United Kingdom was reviewed?

The Prime Minister: The people of both Scotland and Northern Ireland are very well aware of the importance and significance of public expenditure to support the superstructure of their economies. Certainly I shall remind

the leaders of the CBI, and anyone else who wishes to be reminded of that fact, when I meet them, but I have a feeling that last night and on Monday some of the voting was not necessarily directed to the merits of the issue but was an attempt to pressurise—I would not want to use the word "blackmail"—the Government into making concessions that they would not otherwise make.

Mr. Pardoe: Is the Prime Minister aware that it is not only in the matter of taxation that the CBI wants an outbreak of parliamentary democracy and greater parliamentary control? Is he aware that the CBI is asking that this House should intervene on levels of pay in the future pay policy? What does the Prime Minister think about a Select Committee of this House on pay, as the CBI has suggested?

The Prime Minister: I can think of few worse things.

Miss Boothroyd: When my right hon. Friend next meets the CBI, will he ask for progress reports on the new code of conduct for British firms with subsidiaries in South Africa so that he might see to what extent those subsidiaries are implementing that code of conduct in order to bring about better employment procedures for black African workers there?

The Prime Minister: There has been discussion between the Foreign Secretary and other Ministers and the CBI on this matter, and I believe that a code of conduct has been agreed by the Council of Foreign Ministers of the European Community. I shall bring my hon. Friend's question to the attention of the Foreign Secretary so that this can be taken up with the CBI, if it has not been taken up already.

Sir David Renton: When the Prime Minister sees the leaders of the CBI, will he tell them how much longer he intends to govern or attempt to govern when he is unable to persuade the House of Commons to carry out the policy that has been decided upon by the Cabinet?

The Prime Minister: No. I think it quite improper to discuss that matter with the CBI.

Mr. Ward: asked the Prime Minister when he next plans to meet the Trades


Union Congress and the Confederation of British Industries.

The Prime Minister: I met representatives of both the TUC and the CBI when I took the chair at a meeting of the NEDC on 1st February. Further meetings will be arranged as necessary.

Mr. Ward: Now that my right hon. Friend has had discussions with Chancellor Schmidt, what special measures will he be urging upon organised labour to contribute towards the problem of giving every unemployed man, woman and young person purposeful work, in view of the fact that the situation will be very difficult for several years to come?

The Prime Minister: This is a situation in which combined action by the European Governments, as well as an exchange of our experiences, would be extremely helpful. As the Chancellor told me, the situation in Germany is not good in terms of unemployment. It is likely to be difficult for all of us to return to full employment. I cannot give my hon. Friend a detailed answer in the space of a supplementary reply, but he is aware of the many measures that have been taken in this country and the similar measures that are being taken in other countries.

Mr. Tapsell: When the Prime Minister next meets the TUC and CBI, will he explain to them why, at a time when we have 1½ million people unemployed in this country, the Government have just introduced a Budget the immediate effect of which has been to force up interest rates very substantially, thus making it more expensive for industry to provide the new investment necessary to restore high levels of employment?

The Prime Minister: I do not know whether the hon. Gentleman wishes to reverse the vote that he recorded last night. If he really believes what he has said, he should have been with us rather than with the Opposition. With regard to interest rates, I am always a little careful about pronouncing on the market. I stick to the general proposition that the market is not always right, and it may not be right on this occasion, either.

Mr. Canavan: In view of the concern of the trade union movement about the Lonrho bid to take over Scottish and Universal Investments, will my right

hon. Friend give an assurance that the Government will not simply stand by and allow the job prospects of thousands of Scottish workers to be sold out to a multinational concern which is the subject of a Fraud Squad investigation because of alleged Rhodesian sanctions busting? Will my right hon. Friend, therefore, make sure that we have an early statement on this matter?

The Prime Minister: Concern in Scotland has been expressed to me about this proposed takeover. I think that I should leave it to my right hon. Friend the Secretary of State for Prices and Consumer Affairs to consider whether this matter should be referred to the Monopolies Commission. I am sure that he will then make a statement.

Mr. Montgomery: When the Prime Minister does meet the TUC, will he be able to tell it how many snoopers he thinks will have to be recruited to investigate self-financing productivity deals?

The Prime Minister: No. We usually discuss serious matters.

Mr. George Rodgers: When my right hon. Friend meets the CBI, will he inquire why it is that senior members of that organisation persistently make pessimistic and melancholy forecasts about the future of British industry? Is not that surprising, in view of the concessions that have been made by this Government to the CBI's viewpoint? Is it not a fact that members of that organisation seem to spend half their time asking for Government financial support and the rest of their time resenting the intrustion by the Government into industry?

The Prime Minister: I have my criticisms of the CBI, and I dare say that the CBI has its criticisms of me. On the whole, I prefer to try to work with it rather than to attack it, because I believe that the future of British industry is vital to our economic prosperity as a whole. I shall, of course, miss no opportunity of asking the CBI to be less gloomy. But when the CBI talks to me, it seems to take the view that it is the media which are spreading gloom about our prospects. On ocasion the CBI asks whether we cannot do something about it. I always reply that this is a free country, as is well known.

Oral Answers to Questions — PRIME MINISTER (ENGAGEMENTS)

Mr. Noble: asked the Prime Minister if he will list his public engagements for 11th May.

The Prime Minister: This morning I presided at a meeting of the Cabinet. In addition to my duties in this House, I shall be holding meetings with ministerial colleagues and others. Later today I shall be leaving for a visit to North-West England. I should like to inform the House that I propose to call at the Italian Embassy immediately after Questions to convey the condolences of Her Majesty's Government on the tragic and brutal murder of Signor Aldo Moro. I am sure that I speak for every hon. Member in offering our deepest sympathy to Signor Moro's widow and family and in paying tribute to one who was an outstanding leader of his country.

Mr. Noble: When my right hon. Friend visits the Italian Embassy, will he express, in addition to our sorrow, the outrage of Members of this House at the violence that has taken place in Italy in recent years, and particularly in the case of this brutal murder? When he goes to the North-West, will he explain to the many trade unionists and workers whom he will meet there the anti-working-class nature of the amendments that were passed through this House this week? In particular, will he explain to them that if a Tory Government had their way, this would have been at the expense of financial assistance to industry, which would lead to large-scale unemployment in the North-West?

The Prime Minister: I find it difficult to combine answers to both those supplementary questions. I should like to content myself by saying that I wrote to Signor Andreotti, the Italian Prime Minister. I told him that the Government—and, I know, the British people as a whole—remain determined that everything possible shall be done, with the Italian Government and other democratic Governments, to protect the rights of individuals and the foundations of our democratic institutions—in Italy and elsewhere—from this terrible threat that has been posed by terrorist violence.

Mrs. Thatcher: May I join with the Prime Minister in the tribute which he has just paid to Signor Moro? I join with him in condemning the callous and brutal murder which took place. We Conservatives would also like to be associated with the condolences to Signor Moro's family and friends. We should also like to express our understanding of the very difficult decisions that faced his colleagues during what must also have been a great ordeal for them. Signor Moro was a victim of a kind of war waged upon the free society. Because of what has happened, we hope that the resolve to fight terrorism will be the greater, and the future of the free society and democracy the more sure.

The Prime Minister: I am obliged to the right hon. Lady for the manner in which she has expressed her thoughts on this matter. I shall certainly convey them to the Italian authorities. I am also glad that, in addition to the great sorrow and anguish of the family, she mentioned the ordeal that Signor Moro's ministerial colleagues have passed through. I hope that any British Government would face such a situation with the same courage as the Italian Government have done.

Mr. Moate: asked the Prime Minister if he will list his official engagements for 11th May.

The Prime Minister: I refer the hon. Member to the reply which I gave earlier today to my hon. Friend the Member for Rossendale (Mr. Noble).

Mr. Moate: Will the Prime Minister take time today to give a rather better answer to the question put by my right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton)? When a Government have clearly lost control of their Budget strategy, and when they were made to look as foolish as they were last night, is it not clearly time in the national interest if not in the Labour Party's interest, for the country to be given a chance to elect a new Government?

The Prime Minister: I am relieved to hear that the hon. Gentleman was considering only the national interest and not what he conceives to be the interest of the Conservative Party on these matters, although he might be wrong even if he


thought that. The Government are in control of this matter. I should like to repeat what the Chancellor has said before, namely, that we shall take any action that is necessary, despite the irresponsibility of the Opposition, in order to retain control over the financial situation that has been created by the Opposition's votes.

Mr. Raphael Tuck: Will my right hon. Friend take time off to broadcast to the nation and explain to it that the Conservative Opposition are so narked by his success in pulling this country out of the morass in which he found it when he took office that their leader is dragging a red herring across the trail? She is blowing up an issue to five, six or 10 times its normal size and making an election issue out of it. I refer to immigration. Will he explain this to the electorate, so that it is not fooled when the time comes?

The Prime Minister: Yes, I shall certainly do my best to inform the country about these matters.

Mr. Burden: You will have a hell of a job.

The Prime Minister: Faced, as I am, with this Opposition, I agree with the hon. Member for Rochester—[HON. MEMBERS: "Gillingham."] The hon. Member for Gillingham (Mr. Burden). Perhaps Rochester would not have him. The hon. Gentleman has been here a long time, and he had better wait and see. He is always extremely amiable on these matters. As to broadcasting to the nation, if I am to judge from my correspondence I find that whenever these broadcasts take place there is a great surge of support.

BUSINESS OF THE HOUSE

Mrs. Thatcher: May I ask the Lord President to state the business for next week?

The Lord President of the Council and Leader of the House of Commons (Mr. Michael Foot): The business for next week will be as follows:
MONDAY 15TH MAY.—Private Members' motions until 7 o'clock.
Afterwards, motions relating to the Town and Country Planning (Windscale

and Calder Works) Special Development Order.
Consideration of Lords Amendments to the Housing (Financial Provisions) (Scotland) Bill.
TUESDAY 16TH MAY.—Committee stage of the Finance Bill.
WEDNESDAY 17TH MAY.—Remaining stages of the Transport Bill.
THURSDAY 18TH MAY.—Supply [15th Allotted Day]: a debate on industrial relations in the newspaper industry.
Motion on the Bread Prices (Amendment No. 5) Order.
FRIDAY 19TH MAY.—Second Reading of the Homes Insulation Bill and of the Solomon Islands Bill [Lords].
Remaining stages of the Independent Broadcasting Authority Bill and of the Domestic Proceedings and Magistrates' Courts Bill [Lords].
MONDAY 22ND MAY.—Supply [10th Allotted Day]: a debate on the pay of the Armed Forces.

Mrs. Thatcher: May I put two questions to the right hon. Gentleman? First, will he be able to provide a day before we rise for the Whitsun Recess to debate industrial strategy and employment? The question is especially urgent since the news that GEC is being prevented by the row over the pay policy and the attempt to make the company sign a contract about it, which it does not want to do, from setting up a factory which will provide 1,000 jobs? Secondly, with regard to the Supply Day debate on the pay of the Armed Forces, will the Secretary of State for Defence make a statement before the debate on leaks from the Department about pay and premature voluntary release?

Mr. Foot: I shall inquire whether it is desirable or necessary to have a statement before the debate. I should have thought that any comments could be made in the debate itself, but I shall look at the question that the right hon. Lady has raised and, as I say, see whether it is desirable or necessary to have such a preliminary statement.
On the first matter that she raised, I doubt whether we could have a general debate before the Whitsun Recess on the


lines that she suggested. But I shall look at the whole question, because, obviously, there are ways in which this matter can be raised in the House even before the recess. But as for a general debate on the subject, before giving any undertaking I shall have to look into that.

Mr. Heffer: Will my right hon. Friend look further at this question of a debate on the very matter raised by the right hon. Lady the Member for Finchley (Mrs. Thatcher)? I do not agree with the point that she has raised in the sense that obviously she has raised it from a different angle. However, it is of great concern that the creation of 1,000 jobs could be held up in an area such as Merseyside because of an argument in Whitehall about future pay policy which may be introduced in a year or two. May we have a statement from the appropriate Minister on the matter, because it is one of great importance for Merseyside?

Mr. Foot: I was quite sure that my hon. Friend was not raising the matter in precisely the same manner as the Leader of the Opposition. I shall look into whether there should be a statement to the House on the subject in the coming few days.

Mr. Powell: Does the right hon. Gentleman agree that it is important that at an early stage there should be a debate in this House upon the past and future consequences of Commonwealth immigration? In view of the failure of the Official Opposition, for understandable reasons, to provide time, will the Government consider whether they can make this possible for the House?

Mr. Foot: As the right hon. Member indicated, this would obviously have been and would still be a suitable question for the Opposition to raise if they wished to do so. I do not exclude the possibility of a debate on it at some future stage, but I cannot offer any promise of such a debate before Whitsun.

Mr. Fernyhough: With regard to the business announced for Monday week in connection with the pay of the Armed Forces, in view of the attitude of the Opposition this week, which has resulted in a reduction of the Government's revenue, will my right hon. Friend explain where the additional pay for the Armed

Forces is to come from without reducing some of the other commitments which we have accepted?

Mr. Foot: I am sure that the Opposition will seek to try to reply to my right hon. Friend's question when the time comes, although I doubt whether they have a satisfactory answer.

Sir Bernard Braine: Does the Leader of the House recall that the Select Committee on Expenditure's excellent report on preventive health, which was published more than a year ago, the Government's reply, which was published six months ago, and the Blennerhassett Report on drink and driving, which revealed the dreadful toll of death and injury on our roads, all call for urgent debate in this House? Will the right hon. Gentleman take his responsibilities seriously and provide time for a subject touching upon safety and security in this land to be debated here?

Mr. Foot: I am not depreciating the importance of the matters raised by the hon. Member, but I cannot promise a debate on the subject before Whitsun.

Mr. Arthur Lewis: In reply to my hon. Friend the Member for Liverpool, Walton (Mr. Heffer), the Leader of the House half-promised a statement on the wages question. If that statement is made, could my right hon. Friend also arrange for an explanation to be given why the Government almost always implement independent reports on questions such as the Armed Forces, the doctors, the police and Uncle Tom Cobbleigh and all, but always refuse to implement independent reports about the salaries and conditions of Members of Parliament?

Mr. Foot: I leave aside any pejorative contrast in my hon. Friend's question, but of course the matter of the pay of Members of Parliament must be debated—and it will be debated in the House no doubt when we come to the time for the matter to be dealt with. I am sure that when that happens the point that my hon. Friend is raising now will be pressed further and that there will be a full opportunity for a discussion.

Mrs. Bain: In view of the vicious mauling being given to the Scotland Bill in another place whereby a non-elected body is attempting to deprive future elected


Members of a Scottish Assembly of a variety of powers, will the right hon. Gentleman issue a warning that these decisions will be reversed when the Bill returns to this House and that, if necessary, a guillotine will be imposed?

Mr. Foot: The Government will give careful consideration to all amendments passed in the other place. Obviously, the Government will have their own views on many of them and will come before the House in the normal way and suggest how they should be considered. I do not accept all the language that the hon. Lady used to describe what the other place has done, but certainly I agree that we must look most carefully at what it has done, and that is what the Government will do before the Bill is brought forward again.

Mr. Abse: Has my right hon. Friend had an opportunity to consider whether he will, as he promised, extend the time for the debate on Windscale until 11 o'clock, in view of the attenuated debate that we shall have on the issue in any event? Secondly, to avoid any consumption by points of order of the time which will be available, will he clarify the procedure which is to be adopted on Monday and explain how he has made the arrangements that he said he was making so that, despite the fact that the time for praying against the order has run out, it would be possible for that Prayer to be effective on that date? Will he note that there is a motion on the Order Paper proposed by the Liberal Party and that undoubtedly by tomorrow, in order to make it abundantly clear that opposition also comes from Government Back-Benchers, many hon. Members will have signed another procedural motion against the Windscale order? I hope that my right hon. Friend will explain before Monday what procedure is to be adopted for the debate.

[That the Town and Country Planning (Windscale and Calder Works) Special Development Order 1978 (S.I., 1978, No. 523) dated 3rd April 1978, a copy of which was laid before this House on 3rd April, be withdrawn.]

Mr. Foot: On the first question, of the time available, I promised my hon. Friend the Member for Edinburgh, Central (Mr. Cook) and other hon. Members that I

would consider whether we could further extend the extended time that we had already provided. Those representations were made by hon. Members in different parts of the House. I have looked at it, but I still think that the right way for the House to proceed is on the timetable that we suggested. As the House will acknowledge, I am sure, we have carried out exactly what we promised on earlier occasions in providing longer time. Representations have also been made to me about the length of speeches from the Front Benches on that occasion and I certainly hope that those representations will be taken into account.
As for the order of the proceedings—the question put by my hon. Friend the Member for Pontypool (Mr. Abse)—there is a motion on the Order Paper, in the name of the Leader of the Liberal Party, for the withdrawal of the order. That is the motion which we believe should be debated on Monday, but that in no way inhibits other hon. Members from joining fully in the debate. It means that we have carried out exactly what we promised—that that motion, which will be debated and can be voted on, will provide the House with the opportunity to make an effective decision on this matter.

Mr. Wigley: When shall we have the so-called "annual" Welsh day debate, which we have not had for two years?

Mr. Foot: I am not sure whether it would give rise to universal acclaim if I announced it for next week. I think that it will have to be a little later than that.

Mr. Ron Thomas: Before we have our next sitting on the Finance Bill, will my right hon. Friend, for the benefit of the House, suggest to the Opposition spokesmen on Treasury affairs that they might have a short course in addition so that they have their figures right next time and so that their blatant class interest in giving out more and more money to the wealthy members of our society does not cloud their ability even to add up a few simple figures?

Mr. Foot: Certainly if their arithmetic were better, their contributions to the debate would be much briefer.

Mr. Luce: Since it was revealed in the other place yesterday that the British Government have known that for 18 months


40 Argentinians have occupied the southern Thule Island, which is British territory attached to the Falkland Islands, is it not a dereliction of duty on the part of the Foreign Secretary that he has not reported this matter to the House or explained what action he has taken about it? Will the right hon. Gentleman arrange for a statement to be made?

Mr. Foot: I repudiate any suggestion of any dereliction of duty by my right hon. Friend in this respect. Of course the Foreign Secretary has made clear the Government's attitude and the Government's opposition to any suggestion of any alteration of the sovereignty position in the Falkland Islands. I think that my right hon. Friend made that clear before. It is unwise of the hon. Member to cast any aspersions on what my right hon. Friend said.

Mr. Skinner: Will my right hon. Friend use his influence to ensure that there is an inquiry into the disgraceful conduct exhibited by the owners of Windsor Safari Park? First of all, they maltreated their animals disgracefully, as shown on a BBC television programme recently. When the workers complained about that treatment and about their conditions and pay they were sacked. Now they have been made homeless as a result of eviction notices. Is it not even—

Mr. Speaker: Order. I think that the hon. Member should be asking for a debate on the matter next week.

Mr. Skinner: I am getting around to that.

Mr. Speaker: The hon. Member had better get it right.

Mr. Skinner: Is it not even more appalling that Yorkshire Television which claimed earlier this week to wine and dine MPs, is part-owner of Windsor Safari Park?

Mr. Speaker: Order.

Mr. Skinner: Is it not time—

Mr. Speaker: Order. The hon. Gentleman must resume his seat when I get up. He knows that this is the time for questions on the business for next week.

Mr. Burden: Has the right hon. Gentleman consulted the Minister of Agriculture? He promised to discuss with his right hon. Friend the desirability of holding an early debate on the report on the export of live animals for slaughter. What is the result of those deliberations?

Mr. Foot: I am sorry to say that I have nothing further to say about that matter now, but we shall continue to consider whether there could be a debate on the matter. As I told the hon. Member before, this subject is obviously eminently suitable for Private Members to raise.

Mr. Pavitt: Will the House have the opportunity to discuss the proposed new contract for hospital consultants? If it is not possible next week, will my right hon. Friend undertake that, before that contract is endorsed, to the detriment of whole-time consultants, the House will be able to discuss it?

Mr. Foot: I certainly note what my hon. Friend says and I shall discuss it with my right hon. Friend the Secretary of State for Social Services.

Sir Frederic Bennett: Reverting to the topic of the Falkland Islands, and without attempting to cast any aspersions at this stage upon the Foreign Secretary, may I ask whether it is not reasonable for the House to expect a factual statement on the situation in the Falkland Islands dependencies and on the Government's policy in regard to it, rather than having to rely on newspaper reports? That is not an unreasonable suggestion. I suggest that the Leader of the House does not try to draw red herrings across the matter about aspersions on the Foreign Secretary but gives the pledge for which we are asking, which is that a factual statement will be made.

Mr. Foot: I do not complain at all of what the hon. Gentleman has said and the way in which he has put his question. I was complaining about what the hon. Member for Shoreham (Mr. Luce) had raised. He put his question in quite a different way and cast some aspersions on what was said by the Foreign Secretary. I do not think that it is advisable in such a situation that hon. Members should cast doubt on what my right hon. Friend


said. I take note of what the hon. Member for Torquay (Sir F. Bennett) has said. If it is felt desirable to have a further statement to the House on the subject, of course we shall consider it.

Mr. Lee: Would my right hon. Friend address himself to the matter that I raised with him obliquely yesterday—the conflict between demands on hon. Members in this House and the duties of the so-called European Assembly? Will he reflect on the situation which arose on Monday, when an adverse vote took place in the Agriculture Committee of the European so-called Assembly because hon. Members were required for duties here? Have there been any discussions behind the scenes with those who run that organisation to avoid that kind of situation arising again?

Mr. Foot: I am afraid that that situation is bound to arise from time to time. It arises from the fact that this House decided some years ago that this country should join the EEC, which had an institution of this character. If that institution were to be sustained, a clash was bound to occur. We seek to overcome it as much as we can and to devise methods by which the double burden which is bound to be imposed on Members is dealt with. As long as that situation continues, I am afraid that there is bound to be some divergence of call of duty in this respect.

Mr. Adley: Does the right hon. Gentleman recall that this is the third time that I have asked him when we may have a debate—and soon—on the immediate question of the purchase by British Airways of new aircraft and the directly related question of future policy concerning the British aerospace manufacturing industry? In view of the high-powered teams from Boeing and McDonnell-Douglas which are traipsing from Government Department to Government Department, and since this is obviously a matter of concern not only to Her Majesty's Government but to thousands of people working in the industry, will the right hon. Gentleman take on board the fact that we should have a chance to debate this important issue in the House before the Government come to any conclusion on both related issues?

Mr. Foot: I have certainly taken note of what the hon. Gentleman said before on this subject. I acknowledge what he and others have said about the importance of the matter, but I have nothing further to add today.

Mr. Robin F. Cook: Will my right hon. Friend reflect on the answer that he gave our hon. Friend the Member for Pontypool (Mr. Abse) about Monday's debate on Windscale? Is he aware that the proposed arrangements for Monday are likely to result in barely an hour for the Back Benchers unless the Front-Bench speeches are of unaccustomed brevity? Is he aware that the Lords amendments to the Housing (Financial Provisions) (Scotland) Bill, which we are to consider after the Windscale debate, are non-controversial and fulfil Government undertakings? In the light of those considerations, is there any reason why the House should not continue the Windscale debate until 11 o'clock?

Mr. Foot: I note all the points that my hon. Friend has made. I have emphasised from this Box, chiefly in response to his representations to me earlier, that I believe that the Front Benches on both sides should take note of the position and should seek to ensure that there is a full opportunity for others to take part. However, I believe that there would also be inconvenience for other hon. Members if we were to follow my hon. Friend's advice.
We indicated some weeks ago that when we had the order before us we would seek to extend the hour and a half that would be normal under such an order. We have carried out and fulfilled that undertaking. I believe that the House will have a perfectly reasonable debate and will have a full chance to consider the matter before it reaches a decision. I am sorry to say to my hon. Friend that I do not think we can change our decision now.

Mr. Tebbit: Does the right hon. Gentleman agree that when the hon. Member for Liverpool, Walton (Mr. Heffer) is in complete agreement with my right hon. Friend the Leader of the Opposition that there should be a statement or a debate upon the way in which the Government's arbitrary pay policy, which does not have any force under the law of the


land, is being used to destroy jobs on Merseyside, it makes an especially compelling reason to have a statement or debate? If the Lord President sat anywhere except where he does, would he not be the first to be speaking alongside his hon. Friend and asking for a statement or debate?

Mr. Foot: I do not think that my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) stated or indicated that he agreed in every particular with the right hon. Lady the Leader of the Opposition. Indeed, he did the opposite. My hon. Friend went out of his way to nod his assent when I mentioned the gulf between them. He approaches the matter in a very different way from the right hon. Lady. Nor do I accept the hon. Gentleman's description of the results of the pay policy. If it had not been for the operation of a pay policy, I think that the amount of unemployment would have been much more serious. These are matters that the House has debated continually and no doubt will continue to debate continually. Over a considerable period my hon. Friend has asked for a special debate on the problems of unemployment on Merseyside. Some of the matters that have been raised relate to that, too, and we are taking that into account.

Mr. Loyden: Does my right hon. Friend agree that the point raised by my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) is of great importance? At recent meetings Ministers indicated that they were prepared to do all that they could to smooth the way for industry in areas of high unemployment. It appears to be rather contradictory for Government Departments to be nitpicking about employment moving into the Merseyside area when the opportunity arises. Does my right hon. Friend agree that the situation calls for a full-scale debate to review the Government's policies towards employment in the regions?

Mr. Foot: I know that my hon. Friend has put questions in that form before. I have given him my answer. I am sure that we must have an approach to a general debate on matters of unemployment at a reasonable time. However, my hon. Friend the Member for Walton

raised another specific matter when he asked for a statement to be made in the House next week. That is what I promised to consider. I think that that was a reasonable response.

Several Hon. Members: rose—

Mr. Speaker: Order. I propose to call those hon Members who have been rising to ask a question.

Sir John Rodgers: I revert to the question asked earlier by the hon. Members for Birmingham, Handsworth (Mr. Lee) about the absence last Monday of delegates to the European parliamentary Assembly. Could not the whole problem be solved if there were automatic pairing for the delegation to the European parliamentary Assembly and the Council of Europe parliamentary Assembly?

Mr. Foot: I have no doubt that the hon. Gentleman will make his usual representations to the Opposition Chief Whip and that he will get his usual thick ear.

Mr. Raphael Tuck: I echo the remarks of the hon. Member for Sevenoaks (Sir J. Rodgers). As my right hon. Friend knows, I was unsuccessful in raising the matter yesterday under a Standing Order No. 9 application. Does my right hon. Friend agree that it seems extraordinary that six delegates were not paired when there are 12 members of the delegation and six of them were obviously paired? Will he make some arrangement for the reorganisation of the pairing system so that that will not happen again? If not, can we have a debate?

Mr. Skinner: No, make them come here.

Mr. Foot: I am not sure that a debate on the pairing system in the House would necessarily be the most fruitful way of proceeding with these matters. There are discussions between the usual channels. If Opposition hon. Members or any of my hon. Friends wish to raise the matter through the usual channels, we shall be prepared to consider it. We would have to ensure that we took into account the views of my hon. Friend the Member for Bolsover (Mr. Skinner). It is clear even during my short response that there is not unanimity in the House on the; subject.

Mr. Michael Latham: What has happened to the Report stage of the Home Purchase Assistance and Housing Corporation Guarantee Bill since the Government withdrew it at the last moment about three weeks ago? Is the right hon. Gentleman aware that the Bill is extremely important as it would allow us to discuss the present mortgage situation?

Mr. Foot: It will be coming along very soon. I am glad to have the hon. Gentleman's pledge of support on that occasion.

Mr. Skinner: What about certain shareholdings in Julian Hodge?

Mr. Speaker: Order. Will the hon. Member for Bolsover (Mr. Skinner) try to control himself? His running commentary while others are speaking is intolerable and unworthy of the House.

Mr. Skinner: I was just saying, Mr. Speaker, that we might have a debate about shareholdings in Julian Hodge.

Mr. Speaker: Order. If the hon. Gentleman treats his constituents with the same courtesy as he treats me, it is a miracle that he is here.

Mr. McCrindle: Has the right hon. Gentleman seen Early-Day Motion No. 24, which suggests that the Leader of the House might introduce forthcoming business for 14 days forward and not seven days? On the assumption that the Leader of the House is in some degree of control over the parliamentary timetable, what possible objection can there be to that contribution to the proper ordering of our lives?

[That this House requests that the weekly statement of Business by the Leader of the House should in future Include the Business for two weeks.]

Mr. Foot: There are some objections from all Governments to the suggestion that the announcement of business should be on a fortnightly basis. As it happens, it is done on occasions, but in the main I think that it would make the arrangement of business less flexible rather than more satisfactory. I believe that if the matter is considered rather more carefully it will be found that the advantages would not be all on one side and would not be all on the side of Back Benchers. As recently as the 1920s, the Leader of the House used to an-

nounce the business for the following period only on the day before. That would be carrying flexibility a bit far, despite the temptation. I believe that what we do now is roughly the right balance in the interests both of the Government and of Back Benchers.

Mr. Russell Kerr: Is my right hon. Friend aware that it is remarkable when the hon. Member for Christchurch and Lymington (Mr. Adley) and I find ourselves on the same side? However, may I join the hon. Gentleman in asking my right hon. Friend, and through him his Cabinet colleagues, carefully to consider the question of the procurement of aircraft for the British civil aviation industry? May we have a debate very soon on this urgent matter?

Mr. Foot: I shall consider carefully all the representations that my hon. Friend makes on the subject raised by the hon. Member for Christchurch and Lymington (Mr. Adley). When my hon. Friend said that he and the hon. Gentleman had come together on a subject, I felt for a moment that they must have been sitting on the same Select Committee.

Mr. Farr: Will the right hon. Gentleman give the House some encouraging sign that he is aware of the importance of proceeding apace with a Bill to implement Mr. Speaker's Conference recommendations on Northern Ireland? If he cannot proceed with a Bill in the foreseeable future, will he arrange to have a Bill published at an early date?

Mr. Foot: I have nothing to add to what the Prime Minister said when he made the announcement. I think that my right hon. Friend made the position generally clear on that occasion.

Mr. Forman: I revert to next Monday's debate on the Windscale development order. Will the right hon. Gentleman clarify whether the arrangements mean that there will be six Front-Bench speeches on the Liberal motion, if the Liberals start and the Government and the Opposition are involved as well? Does that not strengthen the case for extending the debate until 11 o'clock?

Mr. Foot: I never regard spokesmen from the Liberal Bench as making Front-Bench speeches. That would be a most


extraordinary development, which nobody foresees in future. I believe that the hon. Gentleman has given the wrong nomenclature to the whole matter. Of course, if the Liberal Party tables the motion, it has a right to move it, and there can be no objection to that. However, that is not the same thing as the Liberal Party spokesman making a Front-Bench speech.
I agree with the representations that have been made that we should try to ensure that the speeches from the two Front Benches are kept within reasonable limits. If not, the consequences described by my hon. Friend the Member for Edinburgh. Central (Mr. Cook) will follow. I hope that account will be taken of that.

Mr. Gow: As the Foreign Secretary has known for the past 18 months that British territory in the Falkland Islands has been occupied by a foreign and, in this context, not very friendly Power, is it not a dereliction of duty on the Foreign Secretary's part not to have made a statement to the House? Will the Leader of the House give an undertaking now that the Foreign Secretary will make a statement on this subject at 11 o'clock tomorrow morning?

Mr. Foot: I certainly will not give the undertaking in the terms in which the hon. Gentleman has asked for it for tomorrow. I repudiate any suggestion of there being any question of dereliction of duty by the Foreign Secretary. I shall consider and consult the Foreign Secretary whether a general statement on the subject should be made next week. But I assure the hon. Gentleman and all Opposition Members that the Foreign Secretary and the Government are in a position to look after all British interests in every part of the world.

STATUTORY INSTRUMENTS, &c.

Ordered,
That the draft Aviation Security Fund Regulations 1978 be referred to a Standing Committee on Statutory Instruments, &amp;c.—[Mr. Foot.]

Orders of the Day — IRON AND STEEL (AMENDMENT) BILL

Order for Second Reading read.

[Relevant Documents: The White Paper on the British Steel Corporation (Command Paper No. 7188) and EEC Document No. R/540/78.]

4.1 p.m.

The Secretary of State for Industry (Mr. Eric G. Varley): I beg to move, That the Bill be now read a Second time.
The purpose of the Bill is to raise the statutory limit on the amount of external finance that the British Steel Corporation and its wholly-owned subsidiaries can raise by borrowing. The Bill follows the Government's White Paper, Cmnd. 7149, and the statement that I made to the House on 22nd March. I told the House then that I would be presenting legislation to raise the Corporation's borrowing limit pending capital reconstruction.
The Bill is needed to ensure a substantial bulk steel-making capacity in Britain to meet the needs of our industry. I do not think that anybody in the House today, particularly Opposition Members, would deny that the aim is to have a substantial steel industry, although I note from the amendment on the Order Paper that the Opposition want to deny a Second Reading to the Bill. The Government are concerned to secure an efficient, profitable, modern industry able to compete with the rest of the world and to ensure future employment. We are determined to take all the steps which are needed to achieve that aim.
When the borrowing limit was increased in July last year, the Minister of State told the House that the limit then fixed should carry the Corporation through until the spring of 1979. At the beginning of April this year the British Steel Corporation's borrowings were estimated at £3,070 million. So, contrary to all the statements made by some hon. Members and all the silly comments in the Press, our original estimate of the British Steel Corporation's requirements was about right. It was not far short of the mark. As I told the House on


22nd March, we now need to carry the Corporation through until capital reconstruction, which is necessary, as I made plain on 22nd March, can safely take place.
The extended borrowing powers which we seek today are designed to cover the British Steel Corporation's needs for up to three years. Our aim is to carry out the capital reconstruction sooner rather than later in this period. But it would be foolhardy to do so while the world steel market is still suffering from the worst crisis that it has known for more than 40 years. We need only to look across the Channel to understand that lesson.
For example, a major effort was made in France only a year ago to reconstruct the finances of the major steel industries there, but the continuing worldwide steel recession undermined that effort, and the French Government are now studying further measures to help their industry. Therefore, it is right, in our judgment, to seek immediate approval for finance for the British Steel Corporation for up to two years ahead, together with provisions for us to come back to the House for an affirmative resolution to cover a third year if that should become necessary. As I have already indicated, that is what we want to do, but I understand that the Conservative Opposition have put down an amendment opposing Second Reading of the Bill today.
The Bill will provide the British Steel Corporation with finance for three years and will, in my judgment, give Parliament an adequate opportunity to assess the Corporation's progress. I do not believe that those who want to oppose Second Reading today have bothered to investigate the facts properly. In some respects, they may genuinely have misread the position. The Government's proposals allow for proper parliamentary control of funds advanced to the British Steel Corporation.
An increase in the borrowing limit is not by itself all that is needed to put into effect the financing policy described in the White Paper. As I told the House on 22nd March, all future capital to the British Steel Corporation will be subscribed under Section 18(1) of the Iron and Steel Act 1975. These advances have to be made out of voted money by par-

liamentary approval of annual estimates. The actual borrowings of the Corporation will also continue to be regulated by the annual system of cash limits.
As I have said, we are asking for finance for only two years. Parliament will have an opportunity to consider the uses proposed for the second £750 mililon if it should become necessary.
The Government's approach is one of prudent planning coupled with parliamentary control. It would be unacceptable to us to be faced with inadequate provisions leading to a cash crisis. That is what would happen if the House did not pass the Bill today and let it proceed to Committee. The Corporation would be faced not only with having to look at its plans quickly and hastily but with a cash crisis. That might provide some satisfaction to those who would like to see the British Steel Corporation driven into greater difficulties, but I believe most hon. Members would regard such an attitude as highly irresponsible.
If the Corporation were dependent on an annual consideration of its finances, it would increase the uncertainties which surround it and make it impossible to plan ahead. The BSC is a massive, not a tiny, organisation and it cannot change course quickly. It employs 197,000 people directly in iron and steel making. It supplies most of British industry's steelmaking requirements. Therefore, it must have freedom to plan ahead and to carry out the major investments on which both its viability and the success of much of British industry depends. The Bill is designed to give it that freedom.
As I have said, we intend to finance the British Steel Corporation by subscription of capital under Section 18 (1) of the Iron and Steel Act 1975. We do not expect the Corporation to borrow more money overseas unless there is some particular advantage, such as an offer on exceptionally favourable terms. There is no question of Section 18 money being a soft option. It is a realistic method of interim finance pending the reconstruction which I think all hon. Members now accept will be needed.
As I have told the House on previous occasions when we have debated this matter, the British Steel Corporation is not


the only steel company in the world to be receiving what some people have described as tide-over finance. There are also many companies in Europe and in the United States of America whose steel operations are being kept afloat only by subsidisation from other activities in a way which is not available to the British Steel Corporation.
All new capital under Section 18 subscribed from 1st April this year will have to be properly remunerated by dividends once the reconstruction has taken place. We do not expect any remuneration of the public dividend capital now on the British Steel Corporation's books before that reconstruction takes place.
I understand—if the Press reports are accurate—that the hon. Member for Kingston upon Thames (Mr. Lamont), who is to open for the Opposition, would like to know more about the Corporation's investment requirements. The largest financial requirement is for capital investment, and hon. Members certainly have a right to know more about it. To meet this need, the Corporation provided detailed information on its investment plans in its booklet "Prospects for Steel", which was published on 27th April and circulated to all hon. Members, or at least to some hon. Members who have expressed a great interest in these matters.
It would be foolhardy not to allow the British Steel Corporation to complete the major schemes at Ravenscraig and South Teesside, the cost of which is estimated at nearly £1,000 million, to supplement the scheme at Llanwern. New investment is needed also for replacement purposes, the balancing of primary and finishing facilities, quality improvement, cost reduction schemes and so forth—the sort of thing which I outlined in my statement on 22nd March.
The Corporation has made plain, and I am glad that it has, that it intends to follow up its successes at the Thrybergh bar mill, the productivity of which is equal to anything anywhere in the world—it is a magnificent works—by installing continuous casting of billets at Templeborough, which also is in the Corporation's Sheffield division. Also, subject to the financial evaluation of the conditions which I spelled out on 22nd March, the Corporation hopes to make an early start

on the installation of continuous casting facilities at Port Talbot.
Those are the sorts of investment which are required if, when the world steel market begins to climb out of depression, the British Steel Corporation is to be able to compete on an international basis. I want the Government to give it every opportunity to do so.

Sir Anthony Meyer: The right hon. Gentleman said something a moment ago about completing some investment at Llanwern. Could he give a few details of that? I do not entitrely understand. Perhaps I have missed something, but I could not find a reference to that investment in this document.

Mr. Varley: I understand from the Corporation that there is an investment taking place at Llanwern which has to be completed. I do not know the precise nature of that investment, but I think that the amount is quite considerable. If it is not adequately covered in the document which the hon. Gentleman has in his hand, I shall make sure that further information is given to him. My understanding is that investment has to take place there to complete a scheme which is under way.
I want—and I believe that the whole House wants—the Corporation to be given the opportunity to complete the investment programme. That was one of the principal recommendations of the Select Committee in its report.
The Corporation's booklet "Prospects for Steel" also underlines the need for capacity to be more in line with demand. Neither the Corporation nor the country can afford to maintain massive surplus capacity in excess of reasonable expectations of future demand. That is why, in the Corporation's judgment, there is no case for new starts now in steelmaking capacity which would add to the surplus which we know exists. I think that that probably has been made clear on previous occasions.
In a number of areas, the BSC has negotiated with the TUC steel committee and the local work forces concerned agreements for the early closure of high cost plants. The House is well aware, as I am, of the bitter consequences of the closure of existing plants—the consequences for the men who have devoted


their working lives to the steel industry, and certainly for the communities in which they live.
In the White Paper, "The Road to Viability", we were able to announce the measures we intend to take to help those communities, and I do not think that I need go over them today. But in many of these communities there is little alternative employment at this stage, and they need all the assistance we can give. We shall be looking at that closely in the months ahead.
I understand—again according to the Press reports—that the hon. Member for Kingston upon Thames and some of his hon. Friends have certain criticisms about the level of payments to redundant steel workers. It is clear, I think, that they do not understand the situation, although I do not charge them with not caring about the consequences of redundancies or not wanting to see that men who have been declared redundant are adequately compensated. But I saw criticism in The Daily Telegraph, I think—referring to redundancy payments of £17,000 or something of that sort.
I wish to make absolutely plain that £17,000 is wholly exceptional, and the average payments are. I think, round about £6,000—within that area. There has been a lot of exaggerated Press comment, and I want to put that matter in perspective today.
The Corporation has my full support in its negotiations of the settlement which deals fairly with the work forces being made redundant. This is also in the Corporation's own financial interest.
The revenue side of the trading account is just as important as the cost side. The British Steel Corporation must meet the needs of its customers at competitive, prices, but these prices must be realistic. That is why we have given active support to the measures being taken by the European Commission to deal with disruptively low-priced imports through agreements with supplying countries and through minimum price levels within the Community for major categories of products. We also expect the Commission to take account of users' interests and to deal with their problems.
The Select Committee on European legislation has recommended that as part of our debate today we should consider

EEC Document No. R/540/78. This document bans Community producers from aligning their prices with those for imports from EFTA. It has since become Commission decision No. 527/78, and is extended to alignment with imports from Japan, South Africa, Spain, Czechoslovakia and Hungary.
This approach is in many respects novel and represents a new arrangement. From our point of view, I believe that there is everything to be gained from it—and certainly a great deal to be gained in the world steel situation from dealing with problems by negotiation and agreement. So we welcome the proposals which which have there been made.
The Opposition have on previous occasions asked when we expect the British Steel Corporation to return to profitability. Both the Government and the Corporation share that aim. Can we be precise about how quickly the Corporation will move to profitability? The stage-by-stage approach which the Corporation has advocated, and we as the Government have supported, means a disciplined approach. The BSC has already shown how, by co-operation with the unions and with the local work force, not dealing with these matters in an arbitrary fashion, the financial situation can be helped and, I believe, dramatically improved.
For the current financial year, the British Steel Corporation has projected, on stated assumptions, losses of about £400 million, and this figure is reflected in the negative internal resources figure of £220 million in the current Financial Statement and Budget Report. The House should appreciate that the £400 million figure includes a substantial amount for contingencies and other provisions. The projected trading result before depreciation, contingencies and other provisions is in fact a small profit, representing an improvement over 1977–78 of about £180 million.
But I have to tell the House that, although there will be an improvement, losses and projected losses of the magnitude which I have just described are still unacceptable. That ought to be made clear to everyone who is managing the Corporation and everyone who is working within it. Any objective person who is prepared to look at the situation worldwide must acknowledge that conditions


will be difficult and that international competition will remain intense for many years to come. In these circumstances, we look to the management of the British Steel Corporation to maintain its close consultation with the unions and the local work force and to continue to improve on the projected losses in every possible way.
It would be wrong for the Government to do what I think was called in the Select Committee "second guessing"—always trying to assume that we know best how to run the Corporation. On the other hand I can assure the House that the Government will be monitoring carefully the Corporation's performance as the results come in. I was able to announce in March that we have strengthened the reporting procedure. We shall expect a substantial improvement over the year as a result of the action that is now being taken and the close monitoring with which the House is familiar.

Mr. Hugh Fraser: There is some confusion. Can the Secretary of State give the House a notion of what the losses are likely to be this year and in 1976–77? Am I right in thinking that they add up to about £600 million?

Mr. Varley: The figures have been published. I am not sure about the figure for 1976–77, but I think that it was £150 million. I shall check the figure. The loss which was announced for the last financial year, 1977–78, was about £440 million, although the final report and accounts have yet to come out. For this financial year the Corporation has projected a loss of about £400 million. A substantial proportion of that is for contingencies unforseen circumstances. We want to see an improvement on that because we regard it as unacceptable.
The House has had an opportunity of debating the report of the Select Committee on Nationalised Industries. The Committee made specific recommendations for improving the Corporation's efficiency and the Government's relationship with the Corporation. We published a White Payer setting out our response in detail. No doubt hon. Members who were members of the Committee will tell

us whether they regard the replies to their recommendations as adequate.
We and the Corporation had already adopted many of the ideas that were put forward by the Committee. We are studying others to see whether they are appropriate and can be implemented. We have rejected some of the Select Committee's recommendations. I have given reasons. Some of the recommendations are unacceptable to us.
The Bill is a necessary first stage in financing the British Steel Corporation during the period of great difficulty which it is now facing. The difficulty is fully understood by all hon. Members. The Bill is designed to secure the future of the British Steel Corporation as an efficient, competitive and eventually profitable organisation which provides secure livelihoods for those employed by it. The Government are determined to help the steel industry to overcome the difficulties. The Bill is a clear demonstration of that determination

Mr. Deputy Speaker: Mr. Speaker has selected the amendment in the names of the Leader of the Opposition and her right hon. and hon. Friends.

4.24 p.m.

Mr. Norman Lamont: I beg to move, to leave out from "That" to the end of the Question and to add instead thereof:
This House, while welcoming the steps being taken to improve the financial position of the British Steel Corporation, declines to give a Second Reading to a Bill which, at a time of continuing high losses, in effect provides finance for three years without adequate opportunity for Parliament to make an annual assessment of the progress of the Corporation.
Our attitude to the Bill can be stated simply. We think that the Government's past policies for the industry have been deplorable, that their present policies are a bit better, and that their future policies are dubious. We approve of the belated attempts that the Secretary of State is making to grapple with the Corporation's problems. We recognise that the Corporation requires more money, but at a time of colossal losses we do not believe that it is prudent to provide finance for three years, subject only to an affirmative resolution of the House. While the Secretary of State was speaking it was confirmed that that is all that will be guaranteed.
There will be a one-and-a-half-hour debate on the question of the Corporation receiving more money. One and a half hours is too little for £1½ billion. It is too much money and too little debate.
The late Hugh Gaitskell once remarked that if a man could not ride two horses at once, he should not be in the bloody circus at all. He would be proud of the Secretary of State. He manages not only to ride five or six horses galloping in several directions but to perform somersaults on at least two of them.
Our case is that the Secretary of State has hedged one or two crucial points in the argument and that he has one or two ambitions for the Corporation which contradict each other. But at least the Government are now half way to a sensible policy for steel. Perhaps that is why the Secretary of State was more subdued than usual today. He has had to accept a large part of what he has spent a long time in office denying.
For the Government this has been the most expensive adult education lesson in history. It has been expensive for the taxpayer, who has had to go on forking out to meet the Corporation's losses. It has been expensive for the Corporation itself, because it has seen projects deferred. It may turn out to be tragic for a large number of people who will lose their jobs because of the failure to act earlier and more quickly.
We have only to compare the Corporation with certain companies in America to appreciate the situation. Ministers were keen to compare these companies with the Corporation when discussing the losses. Many of those companies took action earlier and because of that those who work for those companies now know that there is a chance of security of employment.
The Government have produced another White Paper, "British Steel Corporation: the Road to Viability". This is yet another road. We have had enough of them in the past. We have been up a number of cul-de-sacs and at times we appeared to drive off the road completely. But there is quite a lot in the White Paper with which we agree.
It is a pity that civil servants have allowed themselves to draft into that White Paper some crude political propaganda. The White Paper's criticisms

of the last Conservative Government's interventions in the steel industry hardly deserve consideration when there is not a word of acknowledgement of the way in which this Government have intervened and overruled commercial management about plants remaining open, about the way in which the Secretary of State's predecessor allowed himself to be used as a court of appeal against the management and how the Government's own interventions cost the Corporation £150 million a year.
The Corporation has produced the document "Prospects for Steel", which sets out some of its views for the future. We welcome it. There has been a degree of unhappiness in the relationship between Parliament and the Corporation. Last year, when we had a debate on the raising of borrowing powers, a number of hon. Members felt that when the Corporation, wanted to raise its borrowing powers it should at least, each year, present to Parliament a document comparable with a commercial prospectus. The Corporation has done that. We are pleased that it has gone a long way to meet the criticisms that were made last year.
The House has to answer certain questions before it passes this legislation. Has the Secretary of State taken sufficient remedial action in the Corporation? Has he the willpower to finish what he has begun? Can we be confident that the Corporation can become internationally competitive? Do the facts that are spelled out in the Steel Corporation document—if it is to be treated as a commercial prospectus—justify the investment of the sums of money on the scale proposed?
Is it right that there should be finance for three years? The Corporation has the money to carry it forward for another year. This Bill, which is subject to the affirmative resolution, will give it finance for three years. Would it be better if it asked more frequently?

Mr. Mike Thomas: I recognise the hon. Gentleman's desire to leave the Corporation relatively free of interference by this House, and I accept that in the broad terms in which he has advanced it. But does he not want the Corporation to


have a reasonable sense of forward financial security?

Mr. Lamont: Of course I want the Corporation's management to be free to behave commercially, but no private sector company could raise money for three years ahead without having an annual review of its progress. For this House to have the opportunity once a year to examine the Corporation is not, I submit, over-frequent interference.

Mr. Neil Kinnock: Is the hon. Gentleman not making a semantic point about an extremely serious subject, in that even if the BSC were a private company and subject to the scrutiny he has outlined, it is highly unlikely that it would get even one and a half hours of the precise scrutinising examination that this House will give it, let alone the other examinations that will take place by Opposition and Labour Members, inside and outside the Government?

Mr. Lamont: I think that the bankers of any private sector company would scrutinise a company for much longer than an hour and a half. The main point is that if the BSC were a private corporation, it would not be able to raise any money at all.
The merit of the document that the Corporation has put forward is its realism. But the very realism of that document makes it all too clear why we should not provide finance for three years. It makes it clear that the BSC will be a major burden on our national economy for years to come. This year its cash limit is 10 per cent. of the PSBR. The losses this year are expected to be about £440 million. We read in the newspapers that it is believed that the Corporation has built into that an element of overestimation because it does not want to get into the sort of trouble that it had with the Select Committee this year.
I am sure that the Corporation is right in one thing. It has based its expectations on the assumption that inflation will be worse than the Chancellor has forecast. But other assumptions in the document could easily prove wrong. The assumption that exchange rates will remain unchanged, the assumption that the negotiations with the unions will go well, and the assumption that interest rates will

remain unaltered, are in question. Indeed, the final assumption there has been proved wrong since the document was printed.
After losing £440 million this year it is claimed that by the end of next year the Corporation will be breaking even. I do not believe that curves go like that. I do not believe that the Secretary of State believes it, because it is nowhere mentioned in the Government's White Paper.
But it is in the longer term that the document makes particularly depressing reading, because it makes it quite clear that we are to be burdened for a long period with a wealth-consuming, not a wealth-creating, industry. The document says that there is no prospect of the Corporation's being self-financing. For the last few years it has provided only one-sixth of the money for investment, compared with the half that it was originally supposed to provide. It is clear from the document that the future will be exactly the same as the past.
I turn now to the question of investment cuts. The Secretary of State has announced the cancellation of certain electric arc projects, and the cuts at Port Talbot and Teesside. Much of what he said we would regard as being sensible. But the question that we have to ask is whether the balance is about right. Some projects are nearing completion which he says are to be completed. There is not much alternative to that.
It is when we consider the investment to modernise and improve the quality of the Corporation's products that we are entitled to be sceptical. There is not much of a cut there. The Corporation is having to invest about £500 million, and it makes clear in its document that although it is one of the world's worst losers among steel companies, it is investing more than any other European steel company.
We do not believe that one can just pour investment into a company regardless of its losses. It cannot be force-fed, in the hope that that will turn it into an efficient, profitable enterprise. The company needs many other things. It needs management, and the discipline of living within its means. If investment were all that was needed to make the BSC efficient, it ought to have been efficient already because since nationalisation almost £4 billion of investment has been


poured into the Corporation, yet it still is not competitive. We are back where we started, at another financial reconstruction.

Mr. John Mendelson: Steelworkers and management will want to know from the Opposition, in view of the amendment and what the hon. Member is saying, whether they want the BSC to go on modernising. Does the hon. Gentleman wish to be able to decide after 12 months that the process should be discontinued? Will he come clean on that point?

Mr. Lamont: We want the Corporation to tell this House how it is getting on and whether it is making the progress that it claims it will make. Labour Members seem to be mesmerised by investment. They seem to believe in quantity rather than quality, regardless of whether the investment can actually be managed. They used to complain that before nationalisation the private companies did not invest enough. The two events may have been connected—the lack of investment and the threat of nationalisation. But Labour Members ought to ask themselves why the private companies have been investing on a much smaller scale and why they have become profitable as a result. A recent survey indicated that only six out of 60 private sector companies in this country did not make a profit in steel last year.
The extraordinary feature about the Secretary of State's speech and the papers that have been presented to Parliament is that they all indicate the investment of £500 million but give no figure for a reduction in capacity. I suggest that the Secretary of State should try to borrow £1·5 billion while telling his bank manager that he plans to proceed only "step by step". For a Government who are normally addicted to strategies and initiatives it is extraordinary that they should tell the House that there is no blueprint for the future—that progress will be only step by step. Step-by-step progress should be matched by step-by-step scrutiny by Parliament.
The Corporation has a serious problem of over-capacity. Its capacity is 26 million tonnes. It needs to produce and sell 23 million tonnes to break even. Last year it produced only 17 million tones, and for the next few years it is forecasting

sales of only between 16 million and 22 million tonnes. It is taking out some capacity, but that is to be matched by other capacity created by the projects that are about to be completed. Judging from what the Secretary of State said and from the figures we have been given, it seems that there will be substantial over-capacity for some time.
The other area on which we have considerable doubts is the vexed and appallingly difficult question of overmanning. The Corporation has some of the most expensive and some of the best steel equipment in the world, yet it still cannot operate it profitably, because of the manning problem. Predictably, and perhaps rightly, the Government have said that they do not want to set an overall target for manning reductions.
The Government may be right in not accepting the recommendation of the Select Committee that there should be an overall target, and a target for year-by-year reductions. I have no idea what the figure should be. One reads in the newspapers that the Government are talking in private about reductions of 40,000 men. I have also read comments from Sir Charles Villiers, comparing the British Steel Corporation with Bethlehem Steel—100,000 men compared with 168,000 engaged in iron and steelmaking. Whatever the correct figure is, we are chasing a moving target, and the danger is that we shall take five years to achieve what the Germans are achieving today.
The Government may well be right in believing that the best hope is not in an overall target, but that this matter should be left to negotiation between management and unions. If that is the only way ahead, it is all the more reason why the Corporation should not have money for three years, but should then tell the House of its step-by-step progress, how the negotiations are going, and whether the Government can succeed. We are perfectly entitled to be sceptical about the question whether progress can be made in achieving competitive manning.

Mr. John Ellis: In all his comments about the future policies of the Government, the hon. Member for Kingston-upon-Thames (Mr. Lamont) has not said a word about the Common Market. We have the draft instrument R/540/78 from the Common Market


before us. The Conservative Party was in favour of going into the Common Market. Is the hon. Member aware that all these answers about future levels of production and manning are available from the Common Market?

Mr. Lamont: I shall refer to that document in a moment. We are entitled to be sceptical about the Corporation's ability to achieve manning. The Secretary of State has told us about the agreements that have been achieved and what will be done in the future, but we have seen a certain amount of this before. There was the agreement of 23rd January 1976, the night when we had the Brussels-style negotiations. The clocks were stopped and the talks went on into the early hours of the morning. We were told that it had been agreed that changes would have to be made now to reach European levels of productivity. The document issued at the time said:
Having regard to the Corporation's present financial problems, the Steel Committee agrees that the necessary reductions in manpower must take place.
That document, signed then and there between the Corporation and the steel unions, analysed two types of overmanning—recession and fundamental or inbuilt overmanning. The document said this about the two types of overmanning:
The task of making reductions in both categories will begin immediately. In the case of "recession overmanning" the reductions should be completed in three months and in the case of the "inbuilt overmanning" within a period of not longer than two years.
That was in January 1976. What has happened since then?
We do not need to ask my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph), whose statistics are never believed by Opposition Members. These figures have now been confirmed by the Government's own White Paper. There it is in black and white. Opposition Members may get very angry about what my right hon. Friend has said, but it is now confirmed by the Government's own White Paper, their own publication, and their own estimates. There is no ambiguity about the degree of overmanning; the only thing that is ambiguous is the Government's determination to back up the management of the Corporation in achieving competitiveness.
I do not want to suggest that the failure to reach the 1976 targets has been the fault of the trade unions. A large part of the blame lies with the Government, with their rigid incomes policy which has made it almost impossible for the Corporation to buy out overmanning. That has happened in the past. How can we be sure that it will not happen again?
Only this week, on 8th May, The Times carried a report by its industrial correspondent referring to the fact that
Steel industry unions and the British Steel Corporation are heading for a fresh clash over plant closures, heightened by Government intervention in negotiations of new steelworks incentive schemes.
The report said that the Department of Employment was once again hindering the negotiations between the Corporation and the trade unions to achieve competitive manning. The Department was trying to examine these agreements to see whether they conformed with the Government's anti-inflation policy. According to this report, Mr. Sirs and the unions have been in touch with the Secretary of State about this matter which he did not mention today. I hope that when the Minister of State replies he will give an assurance that the Corporation will be able to proceed as it wants in questions of productivity agreements to ease the manning problem.
We do not in any way minimise the human problems involved in coping with overmanning, particularly in areas where the steel industry has been the dominant employer for years and where there is no alternative employment. As the Secretary of State said today, the Government and the Corporation have an obligation to compensate people who are affected. It is because we are concerned about the problem that some of my right hon. and hon. Friends have raised the question of selling to the private sector some of the plants that the Corporation wants to close.
Many of those plants are profitable because they do not have the burden of interest payments and they are fully depreciated. They are profitable, even though they are old-fashioned. But of course they do not fit in with the strategy of the BSC of concentrating production in a few modern plants.
We hope that the Government will not prevent the Corporation from selling to


the private sector. The Government and the Corporation have—

Sir Meyer: In view of the great mirth from hon. Members on the Government Benches about the prospect of the BSC selling plants to private firms, perhaps my hon. Friend will mention the example of Brymbo Steelworks, in North Wales, which was on the brink of being closed down when the British Steel Corporation sold it to GKN. Ever since then it has been profitable and expanding, and it is providing a steady source of employment.

Mr. Lamont: I am extremely grateful to my hon. Friend. There are many examples where this has happened. Another example recently was that of Redpath Dorman Long, which was handled in the same way. No doubt it is hoped that this may improve that company's position. The Government and the Corporation have said that people will not be interested in buying these plants. But that is not the attitude that the trade unions have taken. The trade unions know that old plants can be converted fairly cheaply into electric arc plants to provide a more viable and modest way of making steel.

Mr. Martin Flannery: rose—

Mr. Lamont: No. I shall not give way.

Mr. Flannery: On the point about Brymbo, the truth has not been told.

Mr. Lamont: I shall not give way, because I am not talking about Brymbo Steelworks. I am sure that if the hon. Member for Sheffield, Hillsborough (Mr. Flannery) is fortunate enough to catch your eye, Mr. Deputy Speaker, he will make his own point in his own inimitable way.

Mr. Peter Hardy: On the point about electric arc furnaces, the hon. Member seemed to be suggesting that we should seek a large number of electric arc furnaces as a way of operating efficiently. Does he agree with me that there must be limits on that sort of development?

Mr. Lamont: That is absolutely right. I was making the point that that process is a cheap way of making steel which will be attractive to many people. It is right that a steel industry cannot operate

entirely, or even largely, in that kind of process using scrap. All I was saying was that these old profitable plants that are to be closed could easily be converted. Many people might want to convert them on the ground that it would be a worthwhile investment.
We do not want the British Steel Corporation to damage its own commercial interests, but it does not say much for the Corporation's confidence in its own past investment, or its ability to manage those investments, if it thinks that the modern plants to which work is to be diverted cannot compete with the old plants in somebody else's hands.
There is another reason why we are doubtful about providing finance on a three year basis for the Corporation. We know from the Secretary of State that there is to be a capital reconstruction. In many ways it would seem to us better if we had had this Bill at a time when we could have had the details of that capital reconstruction. We are a little puzzled to know why it has been shoved back. At one time it looked as though it was almost imminent, but the newspapers suggested that competitors were taking the view that the BSC was being financed by subsidies. If that is the view of competitors, I do not see that they will take any different view just because handouts under Section 18 are to be labelled "subscriptions of capital".
Along with the White Paper the Government have published their reply to the recommendations of the Select Committee. I very much hope that the Committee's members will catch the eye of the Chair in this debate and will give us their views on the Government's reply. There are two of those recommendations on which we have some doubts about the Government's reply. The first is the Government's rejection of the splitting of cash limits into revenue and capital. No very good reason seems to have been given in the White Paper for rejecting this suggestion, other than that it would reduce the Corporation's flexibility. That might be the case, but we have to bear in mind that the Corporation is, in effect, unbankruptable. It needs the extra discipline, and we believe that there is much to be said for the Committee's suggestion.
There is a second matter on which we shall be interested to hear the Minister's


reply. The Select Committee drew attention to the extraordinarily high break-even point—amounting to 92 per cent. in the Corporation, compared with a figure of 60 per cent. for the Europeans, and 70 per cent. for the Japanese. The White Paper does not give very much enlightenment about the reasons for this. It says, on recommendation 6:
The high break-even ratio results from the disparity between the Corporation's costs and the prices which can be realised in the market place.
That does not amount to anything more than a blinding glimpse of the obvious. If the Corporation were in a position in which it had only the plants it wanted to operate, and if it had the manning levels it required, what do the Government and the Corporation think the break-even ratio would be? The nagging doubt and fear in some people's minds is that we might find ourselves in a position when, with a completed investment programme, there was a very high break-even point which might be extremely difficult to operate in a country with our industrial relations record.
I have noticed the comments of Mr. Sirs, who doubted the ability of the Corporation to manage these large plants. We do not wish them to remain empty monuments to the ambitions of a bygone age. Therefore, since the White Paper does not give adequate information about the high break-even point, it is important that the Secretary of State should say something more.
Another document which we have had to consider—I think perhaps somewhat unfortunately—is the EEC document on the alignment of prices with EFTA countries. As that document relates to the Davignon plan I should like to stress one point that has been put to me by many business men about that plan. I do not question the existence of that plan on a short-term basis, but there is a danger that the breathing space will not be used to rationalise and remove capacity and that the provisional will become the permanent. If that happens, the problems of the steel industry will be shifted to one section to the other—from the steel-producing industries to the steel-using industries. We should remember that the exports of the steel-using industries are 20 times greater

than those of the steel industry, and that employment in the steel-using industries is 13 or 14 times greater than that in the steel industry. If we travel down a permanent road of damaging the competitiveness of the steel-using industries, we shall damage jobs across a wide sector of the economy.
Furthermore, if the Davignon measures are expanded to last indefinitely, there will be a considerable dancer that investment in steel-using and steel processing will move out of the Community into countries such as Spain and Yugoslavia.
The Secretary of State is right when he says in his speeches, as he often does, that a steel industry is basic to an industrialised nation, but that is an argument for ensuring that people get the steel they want, from whatever source, at the right price. It is not an argument for permanent protection or for cosseting an industry; it is an argument for striving to make the steel industry flexible, adaptable and, above all, competitive.
We think that the Secretary of State is doing some of the right things for the industry, but we cannot be sure of his will to finish the job or his political freedom to undertake the task. Many of his right hon. and hon. Friends seem to take a very different view from the right hon. Gentleman. We saw that in the extraordinary taproom brawl that broke out on the Labour Benches at the time of the debate when cuts were announced. We have doubts whether the right hon. Gentleman will go ahead with the programme he has started. We hope to be proved wrong, but there is sufficient doubt for us to feel that the Corporation should not have finance for three years but for some shorter period. Therefore, we shall vote for our amendment.

4.58 p.m.

Mr. David Watkins: I do not intend to take up very closely the remarks of the hon. Member for Kingston upon Thames (Mr. Lamont)—if only for the simple reason that he opposes the Bill, whereas I rise to support it. I shall be saying some critical things, but I hope that I shall indulge in some constructive criticism and not engage in purely negative hole-picking in the Bill, the philosophy behind it and everything, connected with the steel industry.
I think it would have been as well if the hon. Gentleman had checked the sources of his quotations, as indeed it would have been as well if his Front-Bench colleagues had checked their arithmetic last night. He and his colleagues would be much more effective if they did so, and one could have more confidence in their quotations and arithmetic.
My right hon. Friend the Secretary of State for Industry pointed out, as does the Explanatory and Financial Memorandum, that the proposed increased borrowing limit will cover the British Steel Corporation's financial needs for about another three years. I hope that that forecast will be realised. Notwithstanding my right hon. Friend's justified defence of the estimates of the last year or so, a major problem in the industry for a long period of time is that so many expectations have been invalidated by events. I accept the contention by the Corporation and the Government that forecasts will continue to be subjected to uncertainy, but it needs to be noted that recommendation No. 3 of the Select Committee was that the Corporation and the Department of Industry should improve their financial forecasting. The Government's reply was that they would continue to seek ways of improving "timeliness consistent with accuracy".
As Member for a steel constituency in the North-East of England, a region where almost every forecast made since the early 1970s has been invalidated by subsequent events, I hope that they will succeed. I hope that, given the difficulties in a changing and serious situation, the Bill is based upon the most careful appraisal of the situation that is possible in the circumstances.
The problem over the next three years, and perhaps for a good deal longer, is twofold. The most intense and prolonged world recession since the 1930s shows every likelihood of continuing, with a continuing depression in demand for steel. Yet alongside that is the fact that over-capacity in the production of steel is likely to increase rather than even to remain level or decrease, because every developing country is set on having its own steel plant, not only for reasons of prestige but to reduce its imports of steel.
The overall effect of that, not only on BSC but on steel producers in the devel-

oped industrial countries, is that they will be confronted with a continuing low level of home demand side by side with a reduced demand for exports, and furthermore with low-cost imports being more and more likely to be seeking to penetrate into the market of the advanced industrial nations.
The effect of this will be especially serious in those communities which are heavily dependent on the steel plants. Both my right hon. Friend and the hon. Gentleman referred to this serious aspect of the problem. It is a theme that I want to develop.
One of the most serious—indeed, perhaps the most serious—of all the effects in those areas will be those of reductions in manpower, which I remind the hon. Gentleman is central to the whole strategy of the industry. This is something that is not just starting and projecting into the future but, as I shall indicate in relation to the position in my own constituency, has already been going on for a considerable time in the steel industry. The heavily dependent communities will suffer even more severely than many of them have already if there is not financial and other provision, with special reference to their situation.
As I said I would, I give the example of my own constituency, not only because I clearly have a duty to speak for my constituents but also because this is indicative of what has happened. I am certain that those of my hon. Friends who are similiarly placed and catch the eye of the Chair will say that this is indicative of what has happened in many steel communities throughout the country.
In the town of Consett about half of all the employed men are employed by the British Steel Corporation. In the wider area of north and north-west County Durham, about 30 per cent. of all employed men are employed by the BSC. There are many others in that area employed in industries such as transport and construction whose employment is directly related to the BSC and directly dependent upon it.
All this is in an area where unemployment is consistently double the national average, even in good times. One of the sad features about this debate is that we are talking about bad times and bad times projected into the future.
In the late 1960s there were about 6,200 persons employed in the steel industry in Consett. Today, with a current scheme for 450 redundancies nearing completion, the number employed is approaching 4,800. That alone is a loss of 1,400 jobs in a community where there is very little alternative employment.
The plate mill at the Consett works has been under sentence of slow death ever since 1972. At the same time, there has been—again, this is nearing completion—a massive programme of investment in billet making to modernise the plant. But the whole point from the angle that I am putting before the House is that that will mean fewer, not more, jobs. In terms of people's ability to earn their livelihood and the injection of wealth into the economy of the area as a whole, this means a continuing serious situation. This is in an area in which 15,000 mining jobs have already gone since the 1950s.
With all this background, this is not unnaturally a special development area where there are applied the maximum available incentives for bringing in new industries. Successive Governments of both parties have recognised the need for that. Yet, for all that and the application of the maximum available incentives over a period of years, the total of new jobs provided has been only about 3,500, whereas the total lost is about 16,500. In communities such as this, so severely hit, it is clear that far from there being less intervention there must be more public intervention.
The Government have rejected the Select Committee's recommendation No. 24, to the effect that the Bill should include specific provisions for Government intervention in the Corporation's affairs where that was necessitated. The Government rejected that on the ground that they prefer not to define such powers, because that would limit the flexibility, of the powers. I agree with the principle of not limiting their flexibility, and that it can be limited by definition, but I press upon the Government that there must be flexibility of action, not inaction. I should like some assurances from the Government Front Bench in the winding up speech of the debate that that is likely to be the position.
Developing the theme that much more must be done in areas such as that I am talking about, I suggest that among the uses of the money to be raised under the Bill it is essential to include efforts to expand BSC (Industry) Limited. This is the Corporation's subsidiary which was created especially to attract new industry to the hardest hit steel communities. If that activity were expanded, there would be a spin-off effect, in that the EEC Social Fund would be likely to be available further to add to such efforts. But the initiative must come from the home country. That is one of the fundamental principles. I strongly suggest that BSC (Industry) Limited needs to be strengthened in order to add to the initiatives to bring alternative industry into the hard hit areas.
In Cmnd. 7149, "British Steel Corporation: the Road to Viability", the Government pledged full support in the use of their powers to assist industrial development in the hardest hit steel communities. My right hon. Friend repeated that assurance in his speech this afternoon. But, as I have pointed out, using my constituency as a case in point, even with the deployment of all the available powers to their maximum extent, new jobs provided have been only a fraction—less than a quarter—of what has been needed.
My hon. Friends and I are not pressing specifically for compensation. We certainly are pressing for it where people have no alternative, but we are pressing above all for alternative employment for the people who are made redundant, so that their skills and energies can be put into the production of wealth and not wasted, as is likely to happen otherwise.
Still more is needed. Areas such as Consett should be considered for something on the lines of designated district status, such as is provided in the Inner Urban Areas Bill, which would enable a further concentration of resources in order to regenerate such areas.
I realise that many hon. Members on both sides of the House are seeking to catch the eye of the Chair, so I move to my conclusion by saying that I recognise that the Bill is a step towards financing a viable modern steel industry, but it must also be used as a step towards dealing with the social problems in the


steel communities as well as with the productivity problems and the general build-up of the industry both in those areas and in the country as a whole.
But I believe that even then on its own it will be inadequate to meet the problems of the industry, and that wider measures of governmental and other public intervention, such as, for example, a more active role by the National Enterprise Board are also necessary if the problems of these areas, already so seriously hit and likely to be still more seriously hit in the future, are to be resolved with equity.

5.10 p.m.

Mr. Hugh Fraser: It is a great pleasure for me to follow the hon. Member for Consett (Mr. Watkins), because a few years ago I was happy enough to be chairman of a company using steel in his constituency. I shall return to the question of the steel users' position later.
The Secretary of State was somewhat hesitant in the way he produced the Bill—notably so. The situation is undoubtedly very serious world-wide. There is an over-capacity of steel of about 150 million tons this year, while, in its internal financial position, the British Steel Corporation has lost about £800 million to £900 million over the last three years. Now we have a projection as to profits that is highly uncertain, and it is especially alarming, when one looks at the plan—and I think that the right hon. Gentleman will agree—that in the next three years there will be about 5½. million more tons coming into effect while the actual reduction of old plant will be between 2¼ million tons and, at the most, 3 million tons.
This means that if we continue with much the same world demand as there is today, instead of our plants working overall at about 66 per cent. capacity, they will be working at between 55 per cent. and 60 per cent. capacity overall. That could throw up very serious losses indeed.
Thus, we are working with extremely dangerous figures and projections, and this is why I believe, among other reasons, that we need tighter control of what could be a major bleeding of the national cash investment and the public borrowing requirement, with the effect

on taxation and all the other things that must flow.
I am, therefore, entirely with my hon. Friend the Member for Kingston upon Thames (Mr. Lamont) in saying that the Bill is not adequate to meet what is a highly critical situation. I fully agree and sympathise with those hon. Members who represent steelmaking constituencies in the problems that they face. I shall return to a local problem later—the question of Shelton, where some of my own constituents are employed.
The situation has been summed up, with a statement of how it may be solved, in Sir Charles Villiers's last report, for the year 1976–77. Sir Charles says that there are two keys to our problem, and that these are the two essential keys to a British steel industry. First, we must regain our home market share, which has fallen as low as 53 per cent. in 1976, and, secondly, we must expand our sales overseas. Always in the British steel industry there was a favourable balance of steel exports and steel imports until 1973, when the situation went into a decline. I believe that these are the two answers to the question. First, we must get flexibility for home supply, and secondly, we must cope with the overseas market.
The root trouble with the Government's attitude, which is intense and strong, and so forth, is that they have not thought out the total problem of steel which faces the country. It has changed completely since the original paper drawn up in 1973 by the then Steel Board and the Conservative Government. The present plan is just a modification of that plan which I think is now totally out of date.
We must face the fact that a plan based on massive exports of cheap carbon steel is no longer on. The hon. Member for Consett put his finger on the problem. The great concept of these cathedrals by the sea turning out prayers in the form of millions and millions of tons of steel for the world is no longer possible. I wish it were possible, but it is not.
In the rest of the world there is a steel surplus of 150 million tons. Yet steel plants are still being erected in Mexico, Ghana and elsewhere, both in the semi-developed and in the developing world. We must face the fact that the great sale of what I believe is called in the business cheaper carbon steel is no longer possible.
I believe that we have to concentrate on two areas. First, we must get flexible sales to provide our steel-using engineers with the right type of steel. That means smaller plants. On that point, I shall refer to Shelton later. Secondly, we must realise that it is only steel with added value by the workers of this country that will make a profit overseas in the foreseeable future. This is where there should be the concentration that is lacking at the moment in the approach of the British Steel Corporation and Ministers.
I turn now to the internal question. I believe that a company such as the BSC, with these terrifying losses of £900 million in three years, with capital projections that are dubious, and with markets that are falling, should turn to one obvious thing—that is, to get rid of some of its assets held in subsidiaries.
If I were in charge of British Steel I would be going through the various subsidiary companies and asking "Can I sell it? There are some 140 subsidiary companies, some making chemicals and some of which are quarrying, for example. I do not think that they would fetch very much money but they are taking quite a lot of overheads.
But then one comes to the much more important question—to back assets which at the moment are making money. It is crazy to get rid of a plant like Shelton which, even working at 75 per cent. of capacity, is making £1 million, and which if it had the arc furnaces put in, would make, I am told by the ex-manager, between £3 million and £4 million. People who want to get rid of a plant like that when they are losing £900 million over three years should have their brains examined.
Hon. Members opposite always laugh at the idea of selling off working assets. My hon. Friend the Member for New Forest (Mr. McNair-Wilson) has some interesting correspondence, which I hope will be shown, between himself and Sir Charles Villiers. I hope that he will develop the point I am making. But it has happened in the past. I will take one case as an example—the works at Openshaw in Manchester.
The BSC said four years ago that it must close down, but Edgar Allen, the

company with which I once had some connection as a merchant banker, took the works over and is now, I am happy to say, employing 1,400 people. I assure the House that none of those people wants more nationalisation. It can happen, and it can happen effectively.
It would be better if the BSC reviewed the Shelton situation, but otherwise I believe that the Shelton plant should be offered for sale. It could still employ 1,200 people and could still make a dashed good profit for someone who had put £30 million into it. It would be very good to get 10 per cent. on one's money during a steel slump.
In conclusion, the provisions in the Bill may well not be enough to meet the future losses and capital requirements, many of which are going to the wrong area. Therefore, there must be stricter control of the Minister and of the Corporation, because we are faced at the moment with nothing less than a financial disaster in British steel, and that is why the Government must come forward with something better.

5.20 p.m.

Dr. Jeremy Bray: The House is, I think, settling down into its across-the-Floor argybargy on the industry, after an outbreak of cross-Benchery which, perhaps to our relief, is fading.
After the appalling speech by the hon. Member for Kingston upon Thames (Mr. Lamont)—who set a new standard in carping and superficial criticisms of a nationalised industry—the House should be grateful, by contrast, for the clear and lucid statement made by the BSC in support of its case and by the Government.
As the hon. Gentleman complained, the information is not entirely up to date. Ravenscraig, in my constituency—the same story can be told by my hon. Friends elsewhere—is achieving record levels of output per shift on a very much reduced volume of output, well below what it could achieve with full shift working. BSC's technical performance is improving very rapidly.
How can we provide the BSC with the environment in which it can be a success not only technically but commercially? Here again we have a clue, in that so many of the assumptions, on which the


projections of the prospects for the industry depend, relate to the prices that the industry can get.
At a time of major economic disturbance, it is the most capital-intensive enterprises which suffer most, and among them it is the capital goods industries, such as steel, which suffer most of all. In this position, the BSC is bound to be making heavy losses. Given this situation, it is an enormous benefit that the EEC has had on the stocks for a long time now the Davignon plan. It is right that that plan should be associated with the name of the Commissioner responsible, but we should also recognise that there have been pressures, negotiations and discussions over many years in support of that plan.
Far from sounding the kind of warning that the hon. Gentleman sounded in his conventional, capitalist, competitive-economy spirit, we should be asking whether the Davignon plan goes far enough. First, we should know more about how the plan operates. It is taking a great deal of the time of steel executives in this country. We welcome the information given in the EEC document but would like to know more about how minimum prices are fixed, what percentage of sales in different countries is produced in those countries' industries, what percentage is sold at the minimum prices, and so on. I am sure that criticisms of the plan such as those which have been made from the Opposition Benches will mount, and we shall have to mount a strong defence of it from the Government side.
At the peak of demand, capital-intensive industry is liable to make its prices excessive, to provide poor service to customers and to install far too much capacity. We have been through such phases in the steel industry, I regret, since nationalisation. At these times the response from the Government should be to restrain price increases, to protect consumer interests and to moderate the investment ambitions of the industry.
But at a time of recession, inevitably the pricing gets cut-throat, many backdoor selling methods develop, and there are moods within industries to cut back severely their investment plans. Faced with that position, the Government should set up and supervise pricing systems and make sure that investment is sustained at high enough levels.
If the hon. Gentleman had a little more experience of industry, he would know more about the way in which capital-intensive industry has come to work in the last 15 to 20 years, as compared with the previous period. The higher the level of the board, the more it has to pull against the tendencies of the operating divisions to cut back investment too sharply at a time when lack of demand is threatening their own profits at divisional level.
For that very reason, the Government should be asking the BSC whether it is sure that it is maintaining adequate levels of investment. I refer to one very important figure given in "The Prospects for Steel". It is that the replacement value of the fixed assets in BSC is now approaching £10,000 million, yet in the balance sheet for 1977 the fixed assets are listed at £2,000 million. The replacement cost is five times the balance sheet figure. The depreciation is calculated on the balance sheet figure at only about £100 million a year. At that level, we are depreciating at realistic replacement values the value of plant in BSC over 100 years, which is totally unrealistic.
Whether it should be a matter of Government policy to value nationalised industry assets at replacement value, and what the depreciation should be, are matters for argument, but I think that we would get much nearer the right solution if we moved in that direction. If we were to move in that direction, we would again have stronger support for the kind of policy now pursued in the Davignon Plan.
I believe that the investment priorities which were stated in the Government's White Paper on the completion of existing schemes, replacements, new technology, and cost reduction are entirely right. I say to my right hon. Friend the Secretary of State that we have a number of very important further capital investment projects in Scotland, not only in my constituency but in the constituencies of my hon. Friends, which deserve to come under these categories. We shall be pursuing him with regard to these plants. There is the secondary steelmaking at Ravenscraig and also the new forging machine at Craigneuk Works and others, all of which, I believe, are under favourable consideration by the Corporation.
I most strongly support the plea made by my hon. Friend the Member for Consett (Mr. Watkins) when he said that much greater emphasis needs to be placed on job replacement. I was glad to hear from him that at least a quarter of the jobs lost in his constituency have been replaced. But in my own constituency not one job has been provided to replace the jobs lost in steel. I know that a new and fresh effort is being made and I wish it every good fortune, but I am sure that, by whatever means are needed, we must place a much greater emphasis on job creation in the areas in which jobs have been lost.
The industry has been through a very difficult time and it has not always had the support or understanding that it needs in the House. Perhaps in the course of the last few weeks we have come to a better understanding. I hope that those Opposition Members who understand some of the problems of the industry will be able to keep their party on the rails, because I tremble to think what would happen to the industry if the point of view put by the hon. Member for Kingston upon Thames were ever to become the policy of a Government.

5.28 p.m.

Mr. Richard Wainwright: Today's debate is one more incident in the baffling search for means of democratic control of a nationalised manufacturing industry compatible with highly efficient management. This is a search to which Liberals believe that there will be no satisfactory solution, because that particular circle simply cannot be squared. But, faced with the existence of the BSC, we have to do our best and to hope to make at least some progress.
I believe that some progress in effective democratic control, consistent with commercial behaviour, has been made in recent months. In particular, the priceless boon of a unanimous Select Committee ought to be welcomed. I hope that it is being welcomed by the British Steel Corporation, which has every reason to complain of having been the victim of political bickering in the past.
I am very glad that the Government have produced, for once, prompt replies, within 10 or 11 weeks, to the reports of

the Select Committee, and that we have them available for today's debate. As has already been said, the British Steel Corporation is now very much closer to reality, and we are no longer having the grandiose and Olympian plans which used to appear in the past.
I also believe that minority Government is proving to be a healthy thing for realistic treatment of the British steel industry. No minority Government could have committed the disastrous error of the Beswick review because it would not have been allowed to do so. The hon. Member for Kingston upon Thames (Mr. Lamont) has not made sufficient allowance, in his dire prophecies for the possible future of the BSC, for the changed position as a result of minority Government.
As to parliamentary control, impossible as it is to arrive at anything approaching a complete solution, there is no answer to be found in trying to put such a high technology industry into a totally precarious financial position by subjecting it to the doling out of money on a calendar adjusted to the rhythm of seed time and harvest, which has nothing to do with the modern manufacture of steel. That is why my hon. Friends and I cannot agree with the amendment of the Conservative sector of the Opposition.
I was surprised at some of the other objections to the Bill raised by the hon. Member for Kingston upon Thames. He said that he had hoped to see the scheme for capital reconstruction available so that it could be considered with these new borrowing powers. I understand the pious hope expressed by the Government and the BSC that they will before long have a stable position in which they can hope to devise a realistic and long-lasting capital reconstruction. However, I see no sign of this on the horizon. A basic difficulty would be putting any kind of realistic value on the fixed assets of the British Steel Corporation. It does not need arguing that the value of these cathedrals by the sea, to which the right hon. Member for Stafford and Stone (Mr. Fraser) referred, depends almost entirely on whether they can sell their products at a profit.
The only part of the admirable and realistic "Prospects for Steel" document, which the BSC has supplied, which I


would criticise is the unhelpful emphasis that it places on an alleged value of £10,000 million worth of fixed assets. Who can say what these fixed assets are really worth, even at a replacement value? Who knows whether we shall ever want to replace them? We cannot start a capital reconstruction until we have some idea of the commercial worth of the fixed assets. There is no Solomon available in the highly unstable position of steel industries throughout the world today who can say what a big modern steel works is worth.

Mr. Michael Marshall: I think that the House is listening to the hon. Gentleman with close attention. This is a very important matter. Does he not assume that the capital reconstruction to which all the past speculation has been directed is essentially a matter of reconstructing debt rather than the capital structure to which he is referring, which, I agree, is a much vaster and wider horizon?

Mr. Wainwright: Yes, but the debt cannot be reconstructed without reference to the value of the fixed assets. I shall ask the Minister of State for a reassurance when he winds up the debate—which I am sure will be forthcoming—that in the ordinary conventional, commercial way, if and when the House is asked to consider capital reconstruction, the borrowing powers do go back into the melting pot. This should be self-evident, but it would be helpful to have it confirmed on the record. It would be making a monkey of the House to retain huge borrowing powers, having just cancelled an enormous part of the existing borrowing.
If it had been the case, which it is not, that the BSC was projecting enormous new capital projects over the next three years, there might have been a case for saying that before the BSC embarks on some vast new enterprise in a year or two's time, Parliament should have a full chance of considering the matter. However, that is not so. The plans, although enormously costly, are not packed with new and original projects. The BSC's new document says:
The finance now required for the Corporation is:
for investment

—to complete existing projects

—to make essential replacements
—to improve quality

to finance working capital increases and trading operations in the short term.
There is nothing there to warrant a cutoff point at which the House could usefully re-intervene and impose some different decision as a result of the passage of a year or two.
The third hopeless aspect of trying to impose this crude kind of parliamentary control through ladling out the cash in dollops on a precarious basis is the extraordinary proposal that the cash limits should be divided between capital and revenue. Such a division implies the Victorian fallacy that there is a distinction between capital and revenue of kind rather than of degree, whereas everybody in the House, I am sure, takes the view that capital is simply expenditure that can be written off over more than one year but that revenue items are written off within the year. Therefore, it is entirely a matter of degree.
If the House were ever so foolish as to try to insist on splitting cash limits between revenue expenditure cash and capital expenditure cash the most grotesque diseconomies would occur. If an enterprise found that it was running short of revenue cash to pay wages it would lavish from its capital cash the most uneconomical capital expenditure in order to do at vast expense by some absurd machine what could much better be done by labour, who would have to be paid from the extraordinary concept of a revenue cash limit. I hope that we shall not hear anything more of that.
I thought that the House had learned its lesson about the folly of trying to apply this crude form of supply control to a sophisticated, competitive industry from the appalling disaster of the Ryder method of doling money out to British Leyland, which turned out to be the farce of the century—the idea that the financing of British Leyland capital expenditure could be done by instalments dependent upon a good headmaster's report. The House had to bury its red face in its hands when Mr. Michael Edwardes appeared on the scene and had to confess that the Ryder method of parliamentary control had proved to be a nonsense.
As the British Steel Corporation is operating by the express will of the House,


it would be humbug to deny it a financial programme which will enable its customers, who depend upon long-term assurance of supplies, to have confidence in its future over the next few years. It would be wrong to deny those who supply BSC with extremely complicated plant the assurances that they are entitled to have for the next three years of operation of their businesses. It would be wrong to leave those of the BSC's staff who possess highly marketable expertise in a position of working for a corporation which might be left stranded within about 18 months.
It is of the greatest importance that the House, especially through the Select Committee mechanism which the Government have at last genuinely accepted, should continue a dialogue with BSC that will ensure the highest degree of parliamentary control. It is unrealistic to put up a token opposition to the Second Reading of the Bill, which the Conservative sector of the Opposition knows perfectly well would bring a total disaster to the industry if it took the trouble to try to get the Bill actually defeated tonight.

5.40 p.m.

Mr. Peter Hardy: I welcome the instruction that the hon. Member for Colne Valley (Mr. Wainwright) has given to the Opposition Front Bench in teaching them the diseconomies that would arise as a result of confusion between current and capital expenditure.
However, I could not agree with what the hon. Gentleman said about the value of minority Government. Beswick reviews and such things are far more likely when we have a minority Government than if the Government have a substantial majority of the sort that I expect this Administration to enjoy after the next election.
With minority Governments, far from having fewer Beswick reviews, we would get far more short-term consideration, far more ridiculous reversals of policy, such as we have seen this week, and far more of the sort of arithmetic in pursuit of cheap popularity that the comments of the hon. Member for Kingston upon Thames (Mr. Lamont) on economic theory suggest—and that the hon. Member for Colne Valley would acknowledge

as inaccurate and not entirely responsible. I am glad that the hon. Gentleman at least recognised that we are seeing movement towards successful operation and adequate democratic control of the British steel industry, and I think that moves in recent months will prove historically valuable.
I support the Bill. I am particularly pleased that the Secretary of State referred to the Thrybergh bar mill in my constituency. The only thing that worries me about that mill is that attention is too often focused on its success, which has been tremendous. The mill has shattered world record after world record, but we in the Rotherham area are accustomed to seeing records shattered in other local works. The hon. Member for Arundel (Mr. Marshall) has some knowledge of steel in South Yorkshire and he will not be able to deny those achievements.
My hon. Friend the Member for Rotherham (Mr. Crowther), who is in the Chamber, will agree that, in recent weeks, we have had records established in Templeborough in his constituency, at Aldwarke and in the other areas in which residents of the Rotherham, Rother Valley and Dearne Valley constituencies work. The Aldwarke plant has been a world record heater, as has the Templeborough plant. The Orgreave chemical plant in my constituency is leading the field in seeking the defeat of the pollution that such heavy industry tends to generate.
We in South Yorkshire are entitled to be extremely critical of Conservative Members who always seek to carp and to criticise this important public enterprise. The Opposition would have been more honest and honourable if they had been critical, if they wish to be critical, of the details and aspects of the attitude of Government policy, but they should have recognised that if we are to retain a steel industry, this Bill is necessary and should be welcomed.
As my hon. Friends the Members for Motherwell and Wishaw (Dr. Bray) and Consett (Mr. Watkins) said, those of us who have constituencies in which steel is successful, and will be increasingly successful, have not seen that achievement gained without painful experience. In my part of South Yorkshire we have seen thousands of jobs lost in the last 12 years or 
That painfulness was accepted as a result of careful negotiation, and sensible agreements were made. I suspect that if many Conservative Members had their way, as a result of panic in reaction to present difficulties, the jobs of thousands of steel workers would suddenly be lost, and that would prevent the sort of agreement and development that will allow success to be guaranteed in future. If the Opposition had their way, the sensible arrangements made in South Yorkshire over the last decade would not have been possible and world records would not have been broken now—or in future, as I I am confident that they will be.
There are still Conservative Members who, although they have been quiet today, subscribe to the view that we do not need a steel industry in Britain. I thought that the right hon. Member for Stafford and Stone (Mr. Fraser) was beginning to hint at that, but he did not say it and I found myself in some agreement with him.
While there may be horror at contraction and fear of recession, Britain cannot afford to be without an important and significant steel industry if we are to remain an important industrial nation. If we were to vote against the Bill logically and sincerely, we should be saying that there is no future for steel as a significant industry in Britain. Of course, the Opposition are not taking that view. They are voting against the Bill for not entirely sensible or responsible reasons.
We have to support the steel industry, but there is a great deal in what the right hon. Member for Stafford and Stone said. We have to rely not so much on general steel and bulk steel as on the development of high technology in steel and the supply of special steel of the sort that we in South Yorkshire are particularly skilled at making.
We must emphasise that Britain is determined not to descend to an agrarian economy in the twenty-first century, and the sort of money with which the Government are prepared to back the BSC is essential.
If we are to maintain that success, the painful experiences that we have had in South Yorkshire will have to continue, but that means that we are entitled to

suggest that even further concern and maintained arrangements are necessary to provide alternative occupations.
I am gravely worried about the Conservative Party's attitude on this matter. I recall that when I had the second Private Member's motion on the Order Paper one Friday about two and a half years ago, I sat all day waiting for the opportunity to talk about the future of the steel industry and the consequences of the developing recession that we faced while one Conservative Member after another prattled on about the price of ice cream and the penalties of Government taxation policies on self-employed ice cream merchants and other such people. I question the attitude, values and priorities that the Conservative Party illustrated on that occasion, and we have seen nothing this week to remove that suspicion.

Mr. Michael Marshall: The hon. Gentleman seems to bear the scars of that occasion much more deeply than even I had realised. I remember that when the Bill was in Committee, he raised the same question and my hon. Friends and I invited him to take a full part in the Committee proceedings. For reasons that we all understand, he felt that he had to be rather shy in his contributions, agreeable though they were.
The hon. Gentleman should not get this out of proportion. We all know that on Fridays one cannot always reach the business that one wants to deal with. The point of our amendment is to get more frequent opportunities to debate steel matters in the House.

Mr. Hardy: I am pleased that I gave way to the hon. Gentleman. I believe in these courtesies. In fact, I took part in Committee and made a relevant speech which was extremely useful in the Rotherham by-election which followed shortly afterwards. I shall never apologise for reminding my constituents and others engaged in heavy industry in Britain that, at a time of real importance, the Conservative Party preferred to talk about ice cream rather than about steel.
I heard the Finance Bill debates yesterday and on Monday when Conservative Members gave a commitment that they


wanted to help the people who were succeeding in British industry—the salesmen for our exports, the engineers maintaining the skills and qualities of British industry and so on. I considered the workers of the Thrybergh bar mill—I could as easily have considered Temple-borough or any of our South Yorkshire works, including the River Don works, which was under threat of disaster when the Conservative Government were in office and has recently secured a very large order—and related their position not merely to the words that we have heard from the Opposition but to the tax changes that have been made this week.
I discovered that the record breakers in management or on the shop floor will get little or nothing from these tax changes. However, if one of these men has a son with a particular deformity of tonsil or a particularly skilled manager who can package him so that he gets a gold disc—I believe that that is the correct term—he will be able to make more in a few weeks than his father, working in a successful steel enterprise of the sort that we have in South Yorkshire, could make in a lifetime. That is a valid point, given the Opposition's opportunism in seeking to oppose the Bill. I do not want to say more than that, otherwise my speech might become somewhat contentious, and that is not my intention.
However, I should like to make one further point which I believe should be taken into account. The special steel area of South Yorkshire uses a great deal of energy and iron ore, but it also uses large numbers of sometimes quite mysterious substances, such as molybdenum, vanadium, tungsten, nickel and chrome. All of these can be found in the highly successful and specialised products which we send throughout the world. For instance, parts of Concorde will contain some of those substances and they will be manufactured in my constituency. I am rather worried because very few of these commodities are found in Britain. We are entirely dependent on overseas supplies for these key and sometimes wondrous materials. I am rather anxious that in a rather unstable world, which will be subject to vast change over the next few decades, Britain should have adequate resources of these particular commodities.
I recall that three or four years ago a group of South Yorkshire MPs urged the British Steel Corporation to embark upon a policy of ingot-stocking in order to smooth out the cycles which in those days were very much less severe than they are today. Ingot stocking would assist in sustaining employment for short-term periods. Eventually, after rather too long a delay, the BSC accepted part of that policy. I believe that the BSC should be told that a portion of this very large sum of money, which the Bill will properly provide for the Corporation, should be used in operation on its own or in partnership with other steel-using organisations in Britain, be they public or private, in order to ensure that Britain can have a larger and valid strategic stock of these essential materials.
I do not want the Minister to delay the House this evening by telling us what sort of months of supply we have in reserve, but plainly it would be highly desirable—since world inflation may continue for a long time—that we should have adequate reserves of these commodities and that we should begin to spend a little money upon them now. I am not suggesting that the BSC should suddenly embark upon mad purchasing sprees on world markets, because that would put up the price of these goods. But we should steadily and sensibly develop our reserves of these particular commodities which are so essential to South Yorkshire.
I support the Bill because the success of a steel industry is absolutely essential to Britain. As our successful steel industry in South Yorkshire will require the Bill to be enacted as soon as possible, I should like to compliment my right hon. Friend on its introduction. I hope that we can get the Bill without any delaying tactics from the Conservative Opposition.

5.53 p.m.

Sir Anthony Meyer: I do not think I differ very much from the hon. Member for Rother Valley (Mr. Hardy). None the less, he might be slightly astounded to hear me say that I shall go rather further than my right hon. Friend the Member for Stafford and Stone (Mr. Fraser) in suggesting that there is no longer an economic argument in favour of maintainng a major bulk steelmaking capacity in this country.
There may be an argument for maintaining a highly specialised steel capacity—I am sure there is—but I do not think there is an economic argument for maintaining a major bulk steelmaking capacity. There may be a social argument for that, and I shall come to that later. There certainly is a strategic argument for maintaining a basic minimum capacity. But if, as I propose to argue, the case is strategic rather than economic, it is surely unwise to concentrate production—as the BSC proposes to do—in five large new technology plants. A technical breakdown or an industrial dispute in any one of those would be crippling to the nation, and experience shows that the likelihood of an interruption in production is substantially larger at a very large greenfield plant using new technology than at smaller plants, with established patterns of good industrial relations, which use well-tried techniques, such as at Shelton and Shotton, whose case I shall shortly be putting forward.
I do not always find it possible to support my right hon. Friends in steel debates because of the very special interest that I have in maintaining steelmaking at Shotton. I am glad to see the hon. Member for Flint, East (Mr. Jones) in the Chamber. In view of the unpleasant things that I said about him the other day, I should like to pay tribute to the great work which he does in defending the interests of the steel works.
Tonight, however, I shall have few hesitations in supporting the reasoned amendment that has been put forward by my right hon. and hon. Friends. If the amendment were carried it would not merely enable this House, but would oblige it, to examine year by year, the priorities, projects and future plans of the BSC to see whether they are still appropriate to the capacity of the British economy to attract or generate investment capital. That will enable us to make sure that the BSC plans are still appropriate to the actual and projected level of world demand for steel. Above all, it will enable us to see whether proper account has been taken of the growing competition in steel-making from countries whose labour costs are necessarily very much lower than Britain's could possibly be. I believe that it is this competition from low-cost countries which

is the clinching argument against the attempt to maintain a steel industry of a size to which the ten-year strategy commits us.
I have said that I have a special concern, shared with the hon. Member for Flint, East, in maintaining steel-making at Shotton. I shall be putting forward arguments why that should be done and suggestions how it should be done. However, I, like hon. Members in all parts of the House, must recognise that the resources consumed by the BSC, whether for investment or for losses on current account, are resources which are not available for other and perhaps equally desperately needed things. Members of the Tribune Group are always telling us that is no good having well-manned and well-equipped defence forces if we thereby impose such burdens on the rest of the economy that we can no longer afford a society worth defending. That argument applies infinitely more strongly to the steel industry. It is no good bankrupting the rest of our industry in order to maintain an indigenous steelmaking capacity. If we get to the point where we can maintain a steelmaking capacity only by laying an impossible and unbearable burden on the rest of industry, we would do far better to import a higher proportion of the bulk steel which the rest of industry needs and which the finishing and specialised processes in steel can use.
It is against that background, and subject to those limitations, that I argue the case for maintaining steelmaking at Shotton. I want to keep it, but not if it means sacrificing the rest of industry and all hopes of a decent social fabric—schools, hospitals and roads—in the rest of my constituency. I argue the case for the retention of steelmaking not primarily on the ground of the almost unbearable effect on employment which closure would have on the county of Clwyd. At the last count Clwyd had 11·4 per cent. unemployment, the third highest rate of unemployment in the United Kingdom after the Western Isles and Cornwall. That is even higher than Merseyside and substantially higher than those regions in the North-East whose unemployment problems we all know so well. Within the county of Clwyd, in the Deeside travel-to-work area, no fewer than 27 per cent. of the 40,000 jobs available are provided by BSC.

Mr. Roy Hughes: Politically, is not the hon. Gentleman standing on his head, because four years ago Shotton would have been closed under the proposals of his own Government which he fully supported in the Lobby? If that had happened, there would now be no case for arguing that Shotton should remain open. It would have gone.

Sir A. Meyer: The hon. Gentleman knows perfectly well that I supported the strategy of BSC, which at that time envisaged a substantial expansion of the British steel industry, only on an express undertaking given to me at the time by Mr. Tom Boardman, the then Minister for Industry, that the closure of Shotton would be deferred in order to enable that particular question to be re-examined. [HON. MEMBERS: "It was not in the White Paper."] I got an express undertaking from Mr. Boardman that that question would be reviewed. It was as a result of that that Shotton was included in the Beswick re-examination. In situations of the kind that I am talking about, the loss of 7,800 jobs through the closure of steelmaking at Shotton would be shattering for the area which I have the honour to represent.
But it is not on these grounds that I argue my case. Frankly, I do not believe that it is possible any longer to think in terms of a fully competitive British steel industry which is able to compete against those of Korea, Brazil and other countries with natural advantages and very low labour costs. On the other hand, as I said, for strategic reasons we have to maintain some indigenous steelmaking capacity. That being so, we have to consider carefully the relative case for having these five very large steelmaking plants on which everything is based against the policy of spreading the risk amongst a larger number of smaller plants.
It has been shown in a document produced by the Shotton action committee and by Clwyd County Council that, for a surprisingly small capital investment, steelmaking could continue at Shotton by modernising the open-hearth furnaces. The arguments which I deploy here are valid for other medium and small steel producers throughout the United Kingdom using proved technology and producing small to medium quantities of steel.
By a programme costing a mere £25 million spread over three years, the open-hearth furnaces at Shotton, which cannot long continue in their present form, could be modernised by installing tandem furnaces. The advantage of this scheme is that during the period that these tandem furnaces were being installed, production could continue virtually uninterrupted.
At present, Shotton is under a suspended death sentence. Naturally, we welcomed the decision from the Government that steelmaking should continue into the 1980s. That is very welcome as far as it goes, but it is meaningless without a commitment to provide the minimum investment to enable steel to continue to be made in those open-hearth furnaces. They cannot go on as they are for more than a year or two. Something has to be done.
But it need not be nearly so expensive as seemed necessary at one time. The capital costs of these tandem furnaces would be about one-third of that of the BOS or QBOP processes which were envisaged orginally. Moreover, experience abroad in the United States and Canada, and most strikingly of all at Ostrava in Czechoslovakia, show that really high levels of output and annual average rates of 160 tons per hour can be achieved by this well-tried technique installed in existing equipment with the minimum of disruption.
I hope very much that the British Steel Corporation will look sympathetically on these proposals, which would enable Shotton to continue and to make for itself the steel needed to supply its own newly and very expensively modernised finishing lines which are now perhaps the most efficient in Europe. I am sure that this will be the best solution, and I hope that the Minister will encourage the Corporation to adopt it.
I should like finally to ask the Minister a question, which perhaps he will reply to at the end of the debate. If he is not able to do so, perhaps he will be good enough to write to me about it. If, despite the case that I have been arguing and in spite of logic, the Corporation ultimately persist in its intention of phasing out steelmaking at Shotton, the corollary would be that Shotton's finishing lines would be supplied with hot-rolled coil by Port Talbot. But if the projected expansion at Port Talbot is now to be


scaled down drastically, as I understand it is, will Port Talbot produce enough hot-rolled coil to meet the needs of Shot-ton's finishing lines and, even if it does, what will be the cost of this steel if the much vaunted economies of scale which were expected from the vastly increased output are to be swept away by a reduction in that output, bearing in mind that the high transport costs to North Wales will remain? Will not hot-rolled coil from Port Talbot in the new circumstances be insufficient for Shotton's need, and will not it be quite hideously expensive?

6.5 p.m.

Mr. Roy Hughes: As I listened to the hon. Member for Kingston upon Thames (Mr. Lamont), I appreciated that the steel industry was not exactly entrenched in his constituency or in that of the hon. Member for Arundel (Mr. Marshall), from whom we hear contributions on this vital industry from time to time.
However, in passing I must say that I have a measure of sympathy for the Opposition amendment, because I have argued for some time for greater accountability to this House from our publicly-owned industries. The need is even greater in the case of the British Steel Corporation, bearing in mind that it is in receipt of so much public money.
However, I do not intend to support the Opposition amendment, for different reasons. As I see it, what I call the Joseph doctrine means that the Conservative Party would be prepared to allow our publicly owned steel industry to go to the wall. As the Opposition see it, bulk steelmaking in this country should come to an end. The cat has been let out of the bag by the hon. Member for Flint, West (Sir A. Meyer). But, as I pointed out when I interrupted him, at one time he supported the closure of that key works which, incidentally, I have always believed, bearing in mind the excellent labour force there, should be retained as a steelmaking works. If the Conservative Party has its way, we shall have to rely very much more on imports, and such a course for a heavily industrialised nation would be a hazardous one, because eventually a boom would come and we should be left to the tender mercies of overseas suppliers.
In addition, we have to take account of the social consequences, and I make no apologies for mentioning them. We in South Wales rely heavily on the steel industry. This is the other basic reason why, although I have a measure of sympathy for the amendment, I cannot support it and instead intend to support the Bill.
Having said that, I must add that I have felt for a very long time that the administration of the BSC leaves very much to be desired. This state of affairs has gone on for a good many years. Nevertheless, I appreciate that the present crisis in the industry is due to the stagnation of the British economy, which is not only a British problem but part of the crisis affecting the Western world.
Bearing in mind that we are being asked to authorise these huge sums of money for the British Steel Corporation, we have to ask ourselves one vital question. When the British economy picks up again, will it be the BSC which supplies our needs, or will it mean an additional flood of imports?
We have heard the argument about what the capacity should be and what the future demand is likely to be. The key question, if all this money is to be allowed to British Steel, is, will the BSC benefit when the upturn in the economy comes? There is no guarantee of that, particularly now that we are a member of the EEC and our basic needs could be supplied from Germany, Italy, France or Belgium—let alone suppliers in other parts of the world. The case for import controls, therefore, grows stronger every day. When will the Government face this vital question? The basic need is to save British manufacturing industry, including steel.

Dr. Colin Phipps: My hon. Friend raises an important point. Unfortunately, much of the steel we import has to be imported because it is not made here. Perhaps one of the problems with the proposed investment is that it will go not to those areas which could save imports but only into straight steelmaking.

Mr. Hughes: Many firms in this country still go overseas for supplies which could be obtained from our domestic industry. The BSC's share of the home market dropped from 70 per cent. in


1970 to 53 per cent. in 1976. That is a significant drop.

Sir A. Meyer: Why do suppliers go overseas for their steel if it is made here?

Mr. Hughes: If I may develop my argument, I shall come to that point.
The increase in imports has been due partly to an increase of activity in the private sector, but it is largely due to imports, which amount to 5·4 million tons in 1976. That is roughly equivalent to the output of two Llanwerns. At the same time, our steel exports have slumped from 3·7 million tons in 1971–72 to 2·7 million tons in 1976–77.
Part of the reason is that there is still antiquated machinery in some parts of our steel industry. That affects our product, and major customers such as the Ford Motor Company are turning elsewhere. Large investment is needed, so I support the Bill.
However, besides all this money going into the BSC, we need a real show of planning and commercial enterprise by the Corporation. It has not excelled itself in that respect over the years. The undersea pipe plant used by the North Sea oil industry, which is revolutionising our economy, has been supplied from Italian, West German and Japanese sources. The redundancies and closures cannot go on much longer. The BSC must show enterprise and initiative.
I agree also with the Opposition, to a certain extent, about the need for flexibility in the industry. That applies to Shotton as much as to Shelton. That is why I have supported those two vital plants remaining open. Flexibility is the reason that many small private firms are successful at the moment, to the detriment of the BSC. There is speculation in authoritative steel circles that there is to be a post-Beswick list of closures and that the present programme is not the end.
Perhaps the biggest concentration of steelmaking in the country is in my constituency. There are persistent rumours there at the moment about the future of the former Whitehead's works, now owned by the BSC. We need an official statement from the Corporation that those rumours are absolutely without founda-

tion, otherwise, the morale of the workers there will be undermined.
We in South Wales have suffered enough over steel. It is our basic industry and now employs far more people than coal. Almost the whole investment programme at Port Talbot has been cancelled. Steelmaking has ended at Ebbw Vale, with the loss of 3,000 or 4,000 jobs. East Moors has been closed. These are all in close proximity. Previously, we lost the Newport tube works, with almost 1,500 jobs. The BSC then imported from overseas the very product which that works had been making, with all the consequent harm to our balance of payments. The time is coming when the unions in South Wales will say that enough is enough. The former White-head's works will have a full part to play when the upturn in the economy comes. Although I support the Bill, the BSC must at last start justifying our faith in a publicly owned British steel industry.

6.17 p.m.

Mr. Patrick McNair-Wilson: I start by declaring an interest. I am associated with a company that makes consumable electrodes for electric are furnaces, and with a company in the area of special steels.
No one has a monopoly of wisdom about the British steel industry. It has been subject to political interference since the First World War. Some might think that even Mr. Clarence Hatry and the great collapse of 1929 had as much to do with the reorganisation of Sheffield steel as anyone or anything since.
This industry has been variously described as a commanding height and as one of the most vulnerable industries in the country. We are seeing it in the latter guise at the moment. We would be unwise to lose our nerve about its future merely because of the recession, which is afflicting so many other industries as well.
I take a much rosier view than my hon. Friend the Member for Flint, West (Sir A. Meyer) about the future, but that does not mean that everything is perfect. There are obviously areas that we must look at seriously.
The Secretary of State for Industry and I made consecutive maiden speeches on


this matter in 1964. I had just come from the British Iron and Steel Federation—before nationalisation, of course—and he had come from experience of the industry in his area. Many things said today are similar to what we said then.
I cannot recall a period when this industry has not faced terrible problems. No one can gainsay the fact that it has had colossal investment. It is right that it should have received that investment, but that in itself has not solved the problem.
I remember the old complaints about getting rid of the open-hearth capacity and introducing the oxygen-making converters. We were told how the whole industry would be transformed. When listening to the hon. Member for Consett (Mr. Watkins) I remembered how his own works were threatened by failure. The hon. Gentleman is now able to tell us that they are highly successful. There is no one cure-all to which we can all turn to make everything right. We must face the fact that there is a major glut throughout the development world. That is largely because of what happened in 1973.
The increase of the OPEC prices in 1973 reduced the circulation of money in the Western world in a way that we have not been able to overcome and repair since. That has had its effect on demand. Reduced demand has led to over-capacity in steel, chemicals and a whole range of other products. There is no quick answer to solving the difficulty. Nevertheless, we must all try to do it as I know others are.
We must recognise that the glut has led to a price war. Throughout the world there is a fight to retain the share of the market at all costs. Of course we shall get comments about dumping. Of course some countries will think that they are being unfairly treated.
Since nationalisation the price of steel has been an irresistible target for politicians. That tendency has, to some extent, landed us in the situation in which we now find ourselves. As a result of the constant intervention in steel pricing by all Governments we have been unable to take advantage of shortage when it was there and so make money. Therefore, we have not been able to build up any reserves to meet the present situation. All Governments have been responsible. Poli-

ticians seem to find it irresistible to interfere with the industry. That leads us to discuss these matters and to go into considerable detail. At the same time we have to balance that approach by being proper guardians of the taxpayers' money.
There is a level of intervention that recently made itself especially obvious to me in the sale of the old steel plants. Reference to the issue has already caused ribald laughter from some Labour Members, but it is not a laughing matter. The livelihoods of many are tied up with the plants. Oddly enough, even in this period of recession and depression the old plants can offer an attractive bargain to would-be purchasers. I know that the sale of the plants is laughed at by many, but if it is so funny why is there such resistance to their being sold?
My interest in the sale of the plants began when the Corporation's industry division took full-page advertisements in a number of national newspapers in March. The advertisements were asking investors to go into the areas where closures were taking place to set up new operations. I asked the chairman of the Corporation if that would include the sale of complete steelworks. I was delighted to receive an answer on 30th March. It was the answer that I had hoped to get. The chairman wrote:
BSC would of course be interested to hear if there were purchasers for complete steel works. This is something that we would be ready to discuss either directly or, perhaps better, through BISPA.
That is the British Iron and Steel Producers Association. The letter continued:
I should, however, point out that the equipment in each case is very old-fashioned and would not be suitable for modern economic operation. Indeed, with steel prices at their present levels, I doubt whether even the hardiest investors would be able to work up an attractive proposition.
That is clearly a letter from someone who has excess old capacity. It is clear that he does not want it. He is prepared to discuss possible sales with those who might wish to buy the plants. It is because he is an honest business man that he enters the caveat at the end of the letter that he cannot see how investors could be found to buy the plants.
There were others in the industry, including those in the unions and elsewhere, as well as some hon. Members, who were


asking the Corporation of its intentions. I was delighted to receive the letter that I have quoted from the chairman, and there was a measure of excitement. There was, perhaps, some over-excitement. Steel companies from abroad were being named as possible purchasers. It is no secret that Korff Stahl was mentioned as a possible buyer for the Glengarnock works. The rather elliptic way in which we arrive at that company can be worked out. It was mentioned because it is responsible for the direct reduction plant at Hunterston. It was a question not so much of finding purchasers as discovering whether the plants were available for sale. Surely the letter to which I have referred is an unequivocal answer from the chairman that he was prepared to consider such sales seriously.
Without wishing to weary the House, I should mention that I raised the matter during Question Time. I subsequently wrote again to Sir Charles Villiers because it appeared from a comment that he had made in Germany that the plants could be sold only if they were to produce something other than bulk steel. I was surprised by the comment. If the plants had been available to make jam tarts, he would not have made those comments about steel prices and the difficulty of working up an interest. It is clear that in his mind he had seen the plants going again into steelmaking.
I received a letter from Sir Charles on 24th April in response to my letter. I was surprised to find that he wrote:
At this time of continuing over-capacity in steel BSC must safeguard its commercial interests in any deal involving the sale of any of its assets".
That represents a substantial change of ground. The original proposition from the chairman was that he was prepared to consider selling the plants. He entered the caveat that there were problems because they were old capacity plants and might not be attractive propositions. That was perfectly fair. Between his first letter of 30th March and the letter of 24th April it seems that the Department had told hi it seems that the Department had told him that there was no way in which he would be allowed to dispose of plants that could compete with the Corporation.
That raises a number of fundamental questions, many of which were asked by my right hon. Friend the Member for

Stafford and Stone (Mr. Fraser). The first question is "Why not?" Even if the older plants, which are still capable of making money, are to take business, they may be taking business in areas other than those covered by the Corporation. I do not believe that the protected market makes for success and efficiency. I am worried when I hear the hon. Member for Newport (Mr. Hughes) and others talking about such things as import controls. We shall not make a healthy industry by protecting it. By the sale of the older plants we have an opportunity of retaining employment. If they can make money, so much the better. If they are profitable, that will make the Corporation look to its laurels even more.
There is the idea that we have to sacrifice the older plants, even if they are capable of making a profit, on the altar of cartelised monopoly. That idea has led the industry to suffer world-wide for so long and is especially unfortunate. If the Corporation, with its new gleaming giants, is afraid of what I am told are decrepit, clapped-out old open-hearth furnaces, there is something funny about the large new plants. As we well know, the older plants have been written off. I was told that they had been written off and not written down. They are labour-intensive. At present that is a good thing, bearing in mind our high unemployment. They are comparatively small, and that would enable them to get into the corners of the market that the giants cannot touch.
I am sad to tell that unhappy story. I hope that when the Minister replies he will come clean and tell us that the plants are not available for the making of bulk steel as they would jeopardise the future of the Corporation. I think that someone had better say that, because I understand that today there is a demonstration by Bilston workers, and other people in the country are worried. They want to know the truth about the sale of the old plants. It is not enough to tell us, and to laugh when it is mentioned, that all the equipment is clapped out. We know that those plants still have a lifetime ahead of them.
It is not only the old plants about which I am concerned. There is one shining, glowing example of a new plant about which we need further illumination as to the future. I am talking about the direct reduction plant at Hunterston, to which


I referred earlier. All those who are concerned with the industry know that there are a number of ways of arriving at the product about which we are talking—steel. We know that we have to start with iron. We know that the normal route with iron is the blast furnace. We also know that blast furnaces are getting bigger. But there is another route—the direct reduction of pelletised ore, which produces a sponge iron, for which considerable quantities of gas reforming agent have to be used.
For a number of reasons, the British Steel Corporation has been comparatively cautious in approaching this method of production. But, as a result of a great deal of pressure by Labour Members—one in particular, who is not present now—the BSC decided to develop Hunterston as the first site for direct reduction in this country. Hunterston is a very beautiful area at the mouth of the Clyde—Hunter's Quay. It has already got a nuclear power station. Now the ironmaking plant is being developed, and it will be completed this year.
The question to which we must have an answer, because we have been talking about old plants so far, is: is the new direct reduction ironmaking plant at Hunterston to go into commercial production when it comes on stream, or is it, as I understand, to go straight unto mothballs? If so, the livelihoods of many people will be affected. Therefore, an answer is required. I hope that the Minister will be able to answer the specific question whether the Hunterston direct reduction plant is to go into commercial production or into mothballs. That, again, could raise issues about under-utilised capacity.
In drawing my remarks to a close, I should like to make one positive suggestion. The hon. Member for Newport (Mr. Hughes), who has now left the Chamber, and his hon. Friend the Member for Rother Valley (Mr. Hardy) talked about special steels, the need for independence and so on. Even in this time of glut, there are steel shortages. A few days ago I was talking to someone who was complaining of shortages of special steel. One reason is that the marketing of products by the BSC leaves something to be desired.
I should like to see a wider extension of sophisticated service centres. We know

the service centre. We are all familiar with the steel stockholder. Therefore, let us start from that point. That is up-rated to the point of the service centre which holds stocks of finished product which people can buy. But, because many service centres do not have proper laboratories, they cannot cater for the market to which I have referred. For example, age hardened steel reaches its peak or its limit in 45 days. Therefore, we need people with laboratory experience who can reclaim what is left after that period has been reached. If we had proper service centres in the narrow market to which I have referred, we could have an automatic advantage over the importer who has to bring his product a long way and in the process uses up many of those days. Therefore, an improved service centre approach could make a significant difference to the selling of our products.
Indeed, I go further than that. Reference has been made to exports and to third countries. I think that before going out and building a big steel mill in Qatar, or wherever it is, it might be a sensible idea to put down a service centre and to start shipping some of our products to test the market for the customer before he buys the plant.
Reference was made to the fear of third countries. It is said that we should be swamped with cheap steel from South-East Asia and so on. I do not fear it. It is no argument to say that we must stop bulk steelmaking. I think that, as these countries become industrialised and find, as they often do, that their steel is of a rotten quality—I am not saying that against them, but I think that in the early days they may have a lot of problems—it will stimulate an interest in steel-based products and we shall be able to export more. I do not think that people in various parts of the world making their own steel will lead to the door being shut in our faces. I think that people who are concerned with what steel can do will be stimulated to find export possibilities for our products.
I said at the beginning of my speech that we must not lose our nerve. I am sure that is right. I am in favour of looking thoroughly at all the options that are open and of discussing the matter as we go along. Here investment will not


solve our problems. We have pumped thousands of millions of pounds into the steel industry over the years. Regrettably, we must face the fact that, in common with many of our traditional industries which are declining, the steel industry is also declining. Some of those industries may decline and come up again. I think that steel is one of them.
It is a fact that we have not made as much liquid steel as we did in the days before nationalisation. One has only to look at the graph to see that it is going down all the time. When I left the Iron and Steel Federation the figure was about 26 million tonnes. It is now about 17 million tonnes. That is one example of a traditional industry in decline. Shipbuilding is another. But that does not mean that we should lose our nerve. Neither does it mean that we should scrap all our expertise and technological know-how, because we can build on it. The slump will not last for ever. It will end one day.
The steel industry is central to our economic future. Therefore, as one who has worked in, is again associated with and knows many of the people in it, I believe that it is for us in this House, even if we may disagree as to how accountability works and whether we should examine it every year, to say to people in all parts of the industry—even in the older parts where morale is at a desperately low level—that we in Parliament have faith in the future.

6.38 p.m.

Dr. Colin Phipps: No Labour Member will deny investment to the British Steel Corporation, but I think that it is pertinent to ask two questions about that investment. First, where will the investment be made? Secondly, how will the investment be made?
The question where the investment is to be made affects me personally, in my constituency, and several of my right hon. and hon. Friends. The investment will obviously not be made in Shotton, Shelton, Bilston and Cookley, in my constituency. In fact, Dudley, West has two steelworks and a number of steel finishing plants, and there are two steelworks immediately outside its borders, both of which employ large numbers of my constituents. Those steelworks provide jobs not only directly but indirectly. The whole

infrastructure of the area of the Black Country which I represent is built around steel—everything from the provision of scrap to various kinds of steel finishing and, indeed, the manufacture of a number of special steels.
In considering what is happening in the West Midlands, I think that it is necessary to look at the broader regional policy. As it happens, the Secretary of State is also responsible for regional policy. The regional policy which is now being developed seems to point to the West Midlands being phased out as a steelmaking and finishing area.
We have heard about the five cathedrals by the sea. That is where the investment is going. The hon. Member for Flint, West (Sir A. Meyer) said that to revitalise Shotton no more than £20 million is required. I understand from my hon. Friend the Member for Stoke-on-Trent, Central (Mr. Cant) that no more than £12 million is required to revitalise Shelton. The Bilston action committee, which has been here today, has put out a document which shows that £13 million is required to revitalise the Bilston works. To revitalise the Cookley works, which is an electrical steelmaking plant, requires even less. For less than £50 million we could fully modernise these excellent steel companies which employ large numbers of people. That sum is much less than that which it is proposed to put into any one of the cathedrals by the sea.
Why are we facing this gradual dismemberment and closing down of the traditional steelmaking industry in the West Midlands? The reason lies within the overall regional policy which has been followed by successive Governments. I have culled a quotation from the diaries of the late Dick Crossman which seems to be apposite to what has been going on for the last 15 years. I shall quote from the diary entry for Monday 13th December, 1965. It refers to the then Labour Government's economic development committee, of which Dick Crossman was a member, and to a discussion on the change from tax allowances for industry to the regional industrial grant system. This was part of the early change of regional policy which led to the introduction of the development areas. Dick Crossman said:
So I didn't oppose the switch from tax allowances to grants; but I did point out the


danger of this one-sided approach, which might really hold up development in important growth areas such as the West Midlands. My plea was listened to in silence and then I was courteously told that none of my ideas could be written into this Bill without upsetting the political applecart.
In the Labour Government there is of course a tremendous over-representation of the old development areas, the North-East, Scotland and Wales; and all those MPs are determined to see that their parts of the country get a bigger slice of the cake and that we don't get anything in the West Midlands or in London. I don't blame them for it; but from a national point of view, if our resources are limited and we spend them all on developing the less essential and rather backward parts of the country, we may well find that we haven't allocated enough to extending the growth areas, which is vital for the Government's success. All my colleagues understood the force of my arguments. What depressed me was that no one was willing to apply them in practical politics.
How depressed Dick Crossman might be today I shudder to think. The regional policy of successive Governments has totally failed to do what it set out to do. It has not created new jobs in the development areas. It has propped up jobs in those areas and ensured that jobs are lost in the growth areas.
This has been a false economy. I calculate that if the net effect has been a retardation in growth of 0·25 per cent. over the last 15 years our GNP is now nearly 4 per cent. below what it might have been. That is almost exactly the same as that achieved by North Sea oil. We could have had North Sea oil all this time.
I accept that enormous social problems are associated with allowing growth to take place in the growth areas, but had we put all this effort and money to help people to retrain and move from the old development areas to the growth areas we might now be living in a richer and better economy.
Exactly the same is happening with the BSC. We are spending vast amounts of money on large steelmaking capacity, generally close to the sea and in the development areas. Anyone making a basic commercial or social decision about how best to invest would decide to revitalise all these small efficient plants, which are close to their markets, and to close down one of the cathedrals instead.
Not only would that be cheaper than the current investment policy; it would save more jobs. It would be socially more

efficient than the decision that has been taken. Not only is this a silly commercial and social decision; it is a bad decision, in terms of what the country requires from its steel industry. That has been pointed out already by a number of hon. Members.
I shall describe an example about which I know a great deal. It concerns the development of steelmaking capacity in this country directed at the needs of the North Sea oil industry. All the pipe that is used in the North Sea must bear the American Petroleum Institute specification. This covers the large pipes, which are used for pipelines, the casings, which are used for the drilling of wells and the drill pipes and collars, which are used in the drilling of the hole. Vast quantities of these have been used in the North Sea. None has been produced here.
I have raised this matter on many occasions. The first time was over four years ago. When I asked why the BSC would not invest in these types of pipe I was told that it was because it involved work on too small a scale. That is at the core of the Corporation's problem. All the time it looks at the huge scale. It does not look at the small scale.
That small-scale market is now worth over £500 million. If that is too small for British Steel I wonder what it is aiming at. We have vast steelworks, which can work profitably only at 92 per cent. capacity, yet the Corporation is closing down works which employ between 5,000 and 6,000 people in the vicinity of my constituency. That labour force is highly skilled and is certainly able to make the special steels and equipment that are required in the North Sea.
The whole approach is nonsense. It dates back to the 1969 Finniston plan. It is about time that that plan was buried completely. The future of steelmaking in the West Midlands is finished. The Corporation has decided not to continue in the West Midlands. That has not been said by Ministers or the Corporation, but steel works and plants in the West Midlands are being picked off one by one.
We need a definitive statement from the Front Bench or the Corporation about the intentions. Only then shall we be able to turn the full force of the work forces and Parliament on to the


Ministry and the BSC. Only then shall we be able to say "Here you have a vital resource. You have men with skills, plant and equipment. The country is importing 47 per cent. of its steel needs, often because we do not make the kind or quality of steel that is used in this country. We are told that the scale is too small, but here we have lots of supposedly small-scale plants which are due to be closed down. For goodness sake, let us turn them into small-scale plants producing what we actually need for the benefit of everybody."
Surely it is time that we sank one of the cathedrals and kept afloat these vital small plants, which have always provided us locally with what we need and which can do so in the future if given the chance.

6.50 p.m.

Mr. D. E. Thomas: The only point on which I agree with the hon. Member for Dudley, West (Dr. Phipps) in his analysis of regional policy is that it has been ineffective. It is desirable that regional policy should spread job creation and employment throughout the whole of Britain, but particularly into the areas that in the past have relied upon a narrow range of jobs. My party supports the replacement of jobs in the older heavy industries with jobs in manufacturing industry through a far more aggressive regional policy.
However, we wholeheartedly support the Bill. I support much of what was said by the hon. Member for Newport (Mr. Hughes), who highlighted the impact of the continuing steel crisis on the Welsh economy. Before the recent major closures at Ebbw Vale and East Moors more than 56,000 of the BSC's total work force of 208,000 were working in Wales. Steel industry redundancies have therefore had a disproportionate social and economic effect on Wales where 27 per cent. of the Corporation's total work force was concentrated.
With the steel work force concentrated in Wales in that way, unemployment in the Principality increased from 34,000 in 1974 to a peak of 90,000 last winter. There has been a decline in other basic industries. Between 1948 and 1971 the number of men employed in the coal

industry fell from 115,000 to 41,000 as a result of the closure of 171 NCB mines.
In the 10-year period up to 1975 there was a drop of 100,000 in the total number of men employed in Wales. With the closure of steelmaking at Ebbw Vale and East Moors we are witnessing a further massive run-down of another of our basic industries.
One factor that has made the steel industry in Wales particularly vulnerable has been the lack of product balance and the concentration on steel coil. In 1974, 64 per cent. of all steel produced in Wales was coil, compared with 27 per cent. for the United Kingdom and 30 per cent. for the EEC. The Government and the Corporation are continuing this imbalance. In the past we have put this point to the Government and to Sir Charles Villiers. According to the European Coal and Steel Community it is planned that 67 per cent. of Welsh steel capacity will still be given over to coil compared with 29 per cent. in the United Kingdom and 32 per cent. in the EEC. We have been pressing, and we shall continue to press, for this product imbalance to be eradicated in the Welsh division.
We are concerned that, because of this product imbalance, the proportion of the BSC's losses will be higher in Wales than in other parts of the country. We derive no satisfaction from the fact that Wales, with 30 per cent. of the steelmaking capacity, incurred 40 per cent. of the £200 million loss in the first half of 1977–78. The losses, we believe, are due to the imbalance in the industry's structure in Wales.
We want to guarantee a long-term future for existing steel-making jobs. It is in this context that we have been deeply distressed by the Government's decision not to go ahead with major new investment. There has been this massive cut-back in the planned £835 million investment at Port Talbot. We have been told by the BSC, as we were told by the Secretary of State when he announced postponement of the Port Talbot investment, that the Corporation is to keep under review on a step-by-step basis the need for further expenditure and for the investment at Port Talbot.
We believe that the failure to invest in Port Talbot means the loss of between 7,000 and 8,000 jobs in the 1980s. It


has a bearing, too, on the achievement of international output levels of 500 tonnes per man year. The decision not to invest in Port Talbot has implications for the tinplate industry in the area. There are deposits of coking coal at Margam, and that combined with the port and rail facilities and the pool of skilled labour, makes Port Talbot one of the most suitable sites in Western Europe for steel making investment. The medium and long-term viability of the Welsh steel industry in the 1980s and 1990s will depend upon investment in Port Talbot.
We have had no indication from the Corporation of when it intends to undertake further investment to upgrade quality by installing continuous casting facilities. On page 13 of the Corporation's document we are told that the financial evaluation of investment in continuous casting is being undertaken, but we want to know soon whether the Corporation will undertake that investment at Port Talbot.
I turn now from the position at Clwyd. I endorse what was said by the hon. Member for Flint, West (Sir A. Meyer) about the activity over the years of the hon. Member for Flint, East (Mr. Jones) in attempting to retain steelmaking on Deeside. However, I cannot understand the logic of the hon. Member for Flint, West. At one time he voted for a Conservative strategy that would have closed Shotton—although we are told that he had some private assurances at the time, whatever they were worth—and now he is apparently arguing in favour of maintaining steelmaking at Shotton. I do not want to go into the social arguments about the number of jobs that would be lost in Clwyd and on Deeside with the end of steelmaking there. The total affected would be over 7,800. Instead, I want to take issue with the Select Committee over what it said about Shotton in its First Report. It failed to appreciate what Shotton is now doing and the sort of future that Shotton could have.
It galls me, as it galls members of my union in the area, that the Select Committee, while having time to go to Japan, the United States of America, Germany, Belgium, Italy and France, did not have time to visit Shotton, but made recommendations in paragraph 146 about the future of the plant without apparently

understanding what was going on there. It told us in paragraph 146 that:
Your committee believe that open hearth steelmaking should be phased out in favour of oxygen steelmaking which has lower overall costs. They therefore accept that Shotton should be developed as a centre for cold rolling and coated steels.
It went on to talk about the specialised problem caused by the closure of obsolete plant units but it believed that
the establishment of alternative employment is in the best long-term interests of the local community.
Then it used the phrase that I am unable to understand, although I have studied it carefully. It recommended that
the Secretary of State should take into account the need for the maximum productive efficiency in the Corporation when he comes to review the future of iron and steel-making at Shotton.
That sentence can be taken at least three different ways. The way that I would want to take it, in answering the attitude of the Select Committee, is to press on the Corporation the investment that has already taken place in Shotton.
I endorse the arguments put forward by the hon. Member for Flint, West on behalf of the steelworks at Shotton, the unions and the county council, for a limited investment in the modernisation of the open-hearth furnaces and the creation of three new tandem furnaces.
At present we have at Shotton an integrated steelworks producing hot rolled coil, and a high proportion of what is produced is processed for coated steel products. We have the new coating complex which has been completed at a cost of £47 million and this has increased the coated steel capacity at Shotton to a maximum capacity of 20,000 tonnes a week.
We have the new cold mill—an investment of £20 million—which was commissioned in 1975. This mill, along with the existing cold mill, gives a total capacity of 35,000 tonnes a week. The present hot strip mill at Shotton, which was modernised in 1962 to a standard comparable with strip mills at Llanwern and Ravenscraig, which were commissioned at the same time, has the capacity to supply the potential of the cold mill capacity there.
A slab mill will be completed in the summer of 1978, the two blast furnaces


were modernised in 1969–70, and the coke ovens were brought up to modern design and commissioned in 1970.
When the Select Committee talked about the position of obsolete plant units in the same paragraph as it talked about Shotton, it obviously did not understand the extent of investment and modernisation that had already taken place at Shotton and the potential for maintaining steelmaking there.

Mr. Roy Hughes: In this case there is another major factor which the hon. Member has left out—the almost ideal state of industrial relations at Shotton. Surely that should be part of his calculations.

Mr. Thomas: I am grateful to the hon. Member for his intervention, and certainly I would endorse what he has said about industrial relations and the quality of management and decision-making at Shotton. That is an important and essential factor when one talks about the viability of maintaining the unit.

Mr. R. B. Cant: I speak on behalf of Shelton, which is the other plant under discussion. The workers there are ashamed that in 1894 they had the only strike in their history.

Mr. Thomas: This appears to bear out the point that we have always made—that within BSC there is a quality of industrial relations that is achieved in the smaller units.
The hon. Member for Flint, West quoted the submissions made by the steelworkers at Shotton, the unions and the county council, of the capital cost of £25 million for the three tandem furnaces. We put this to Sir Charles Villiers when we met him last month, and I am a little concerned at his response. He seemed to indicate that no undertaking had been given by the BSC of any investment on that sort of scale. However, it is my understanding—and I would be grateful to the Minister if he would confirm this when he replies—that investment of this order can be undertaken by BSC on its own volition without approval from the Department. Therefore, the question of investing £25 million on the kind of modernisation that we want to see is a decision that could be taken by the Corporation itself.
All that we have on the medium-term future of steel making at Shotton is the statement that Sir Charles Villiers made on 24th March 1977, when he said:
The open hearths at Shotton will be brought up and kept in prime condition, and we shall want Shotton's steel make for many years to come. The 'Shotton option' remains open for technological progress, new commercial requirements and other potential development of hot rolled coil in the second half of the eighties.
If that means anything today, it means that in the context of the present cutback in major capital investment in the Corporation, investment in modernisation on a limited medium scale at Shotton and at other similar plants is an investment which should be made, and made quickly.
There are two other issues that I wish to raise. First, there is the question of pricing. This is relevant to our debate, because it is raised in the EEC document. On my visits to the Community I have talked to people in the European Coal and Steel Community. In our studies of this matter in the steel policy group in my party, we have been deeply concerned about the fact that the Government seems rather unwilling to stand up for the English, Welsh and Scottish steel industries within the EEC. We take the view that the Community, although it has now produced its Davignon plan, has been unwilling to take tough action, and we feel very strongly that the interests of steelworkers in Wales are being sacrificed on the altar of Common Market ideology of the free market, the so-called non-distortion of competition and transparency of pricing.
We believe that the United States—that great bastion of capitalism—has taken a far firmer line in advancing the interests of its steel industry and steelworkers than either the EEC or the United Kingdom. The United States did in fact produce a trigger price system covering steel imports, based on full production costs, including profits, of the most effective foreign producers. The Japanese have been forced to provide data to the United States to do this. The United States has taken more aggressive action of the kind being advocated by the hon. Member for Newport in having a pricing mechanism which makes home production really competitive. Although I agree with the hon. Member that we may have to consider


moving towards selective import controls in the not-too-distant future, a tougher internal pricing policy would ensure fair competition.
One of the arguments so often advanced by the official Opposition completely misses the point. They talk about the essential contribution of the free market to efficiency and competition. But they miss one basic point: if there is unfair competition within the free market, for whatever reason, that cuts against the whole basis of the argument. Steel dumping into the EEC and the United Kingdom gives an unfair advantage which could be overcome if we had a more effective pricing policy.
Secondly, one of the things that concerns me most is that there seems to have been an over-reaction by the BSC to the experience of recession and the inaccurate forecasting that has taken place. I am not impressed, reading this document, that the British Steel Corporation is still taking planning seriously. I am fed up with hearing chairmen and top executives of nationalised industries talking about a step by step approach, and thinking only of what they are undertaking this week instead of thinking about what they intend to do next year. That is not the kind of approach one should expect from a nationalised industry under a Labour Government.
The fact that the forecasts on one strategic plan were wrong is not an argument against medium or long-term planning. It involves building better information into one's planning models. Planning is a continuous process, and I hope that we shall not see the Corporation failing to undertake detailed medium- and long-term plans which may be updated as a continuing planning process. The fact that the Finniston strategy was wrong and that the 10-year plan was inaccurate is not an argument against planning. It is an argument against that particular plan, because it was overtaken by the turn in international events.
I hope that the Minister will give an assurance that by writing this cheque to the BSC we shall at the same time stress the need for the Corporation to undertake effective medium and long-term planning. The present document issued by the Corporation comes nowhere near the concept of an effective medium or long-term plan.

7.12 p.m.

Mr. David Lambie: Before I deal with the Bill, I wish to take up a point made by my hon. Friend the Member for Dudley, West (Dr. Phipps). He complained that the British Steel Corporation was picking on small steelworks in the West Midlands and that that policy was wrong because it was affecting employment and production in that area. I accept that, but that argument should not be widened to embrace the policies of successive Governments in carrying out regional policies to help the north of England, Wales and Scotland, where there is also unemployment. For a number of years the Corporation has been picking off small plants in those areas, too. Therefore, before my hon. Friend starts crying for the steelworkers in the West Midlands, he must remember that at least in that area there are alternative jobs.

Dr. Phipps: There were.

Mr. Lambie: There still are alternative jobs, compared with the problems that we face in the regions, whether in the North-East of England, Scotland or South Wales. In my area—the Garnock Valley area—in which we face the closure of the Glengarnock steelworks, we already have an unemployment rate of 12 per cent. or 13 per cent. If the Corporation gets its way and closes that steelworks, the unemployment rate will rise to between 35 per cent. and 40 per cent. There is nowhere in the West Midlands, or in any of the other parts of the Midlands, that can approach the unemployment rate that now obtains in my area, even without the closure of Glengarnock. I suggest to my hon. Friend that the enemies of the West Midlands steelworker are not the steelworkers in Scotland, Wales or the North-East; their enemies are those who are carrying out the policies of the BSC. I appeal to my hon. Friend to unite with me so that we may bring about some change in Government policy to force the Corporation to change its policy on the closing of small steelworks, where-ever they may be.
I welcome the Bill, because in the next three years it will increase the borrowing limits of the Corporation from £4,000 million to £5,500 million. But for this Bill the steel industry throughout Britain


would be at the point of collapse. Therefore, I am surprised that the Opposition intend to vote against the Bill. If ever we needed united support for the steel making areas, it is in the vote tonight. If this Bill does not go through Parliament, not only the small plants but the whole of the steel industry will collapse. We shall hand over the British steel industry to our foreign competitors. I hope that the minor opposition parties will support the Government tonight. They have not always supported the Government on steel and similar issues, but I hope that they will give their support tonight, because the future of the United Kingdom steel-making industry depends on this legislation getting through.
My right hon. Friend the Secretary of State for Industry said that the BSC's course could not be changed quickly. My only criticism of the Bill is that the Corporation has not gone far enough, and that we have changed course too quickly. Since 1974 we have gone through a whole series of negotiations involving the Corporation, the TUC, the STUC, the Government and those Members of Parliament with constituency interests. We also underwent a series of negotiations and reviews under Lord Beswick, and I believe that we reached a good conclusion. We aimed at guaranteeing the future of the United Kingdom steel industry. At the same time, we aimed at modernising and retaining plants which could become viable after slightly increased investment. I believe that we should have had faith in the future of the British steel industry and carried out the proposals put forward by Lord Beswick, and that we should have supplied the money to finance them.
I am very much involved in the future of Glengarnock steelworks. The Secretary of State said that in areas of closure or redundancy the Government are actively examining the question of attracting alternative industry. I hope that the Minister will spell out what the Government have done in North and Central Ayrshire to attract alternative industry. I hope that he will make clear what other industry will be brought in if the Corporation is allowed to close the Glengarnock steelworks.
There have been many rumours about the importation into my area of a Jap-

anese earth-moving firm. There have also been rumours that American chemical firms are coming to Scotland. If one reads the newspapers, one gains the strong impression that all these outside firms are about to come into the Garnock Valley. Unfortunately, the people who live in the Garnock Valley have never seen any sign of those firms, and our unemployment rate is still 12 to 13 per cent. Therefore, I hope that the Minister will spell out to my constituents in the Garnock Valley what industry the Government propose to attract to the area if they allow the Corporation to close the steelworks.
I am always an optimist—I suppose that politicians are born optimists—and I still believe that the Corporation will put up the investment of £7 million required for the reheating furnaces at Glengarnock. The open hearth furnaces can then be phased out. Such furnaces cannot be retained if we hope to retain a viable steel industry. We can phase out the open hearth furnaces so long as we put in the reheating furnaces, as was guaranteed under the Beswick plan. If we can obtain that investment of £7 million, we shall be able to continue to make steel in the Garnock Valley. The Government will not then need to go to Japan or the United States to attract industry into my area. The industries are already there, and we want to sustain them in order to retain the Garnock Valley as a steel-making area.
Although Hunterston is not in my constituency, I have always shown great interest in the steel developments in that area. The future of Glengarnock steel works has been linked to the development of steel-making capacity at Hunterston. We now know that in the plans prepared by the Corporation, accepted by the Government and spelt out in the Bill, investment in the electric are furnace at Hunterston is to be deferred.
What shall we get? A total of £150 million of investment will be mothballed at Hunterston. We have built an iron ore terminal and stockyards. We have brought in a new railway system, and we are completing two direct reduction plants.
Bob Scholey and Sir Charles Villiers told me at a meeting in the House that they would mothball all the site. Those are the men who are running the British


steel industry. When I hear about getting rid of redundant workers, I wish that the Government would start with redundancies at the very top. If we got rid of some of the men at the top, we might not need to get rid of so many men at the bottom.
What has been wrong in the British steel industry is that we have not had men of capacity running it. Some of my hon. Friends were not happy with Sir Monty Finniston. I was one of those who, at the time, made representations to my right hon. Friend the Secretary of State that Sir Monty Finniston should stay, because at least he knew the position at Hunterston. His reputation was based on Hunterston. Unfortunately, the man who is really running the British Steel Corporation now—the chief executive and deputy chairman—was always against Hunterston. He now has the power to do what he could not do as the boy under Sir Monty Finniston.
I hope that the Government will put pressure on the management of the BSC to examine the continuation of the investment at Hunterston, because within the £5,500 million that we are voting on tonight there is still a certain amount of leeway to allow schemes such as Hunterston to go ahead.

Mr. Hamish Watt: Does the hon. Gentleman agree that perhaps the best insurance policy that any steelworker in the West of Scotland can have is to vote SNP and have a strong SNP presence there, so that we can at least frighten the Government and ensure that they will go ahead with production at Hunterston, or even keep the works going at Glengarnock?

Mr. Lambie: I do not mind the hon. Gentleman's coming from the North-East of Scotland to give the industrial workers in the West of Scotland some political advice, but I would rather he came to North Ayrshire and gave the advice to his own political friends in the SNP. As I have told his friends very often, among those who gave evidence at the Hunterston inquiry against the industrial development of the Hunterston area were the then prospective SNP candidate and the constituency parties of the SNP in North Ayrshire and in Kilmarnock and Central Ayrshire. If the hon. Gentleman has any advice to give people on how

they should vote, luckily the people in Central Ayrshire know how to vote, as they showed in the regional elections. I am glad of that.

The Minister of State, Department of Industry (Mr. Gerald Kaufman): I may be able to assist my hon. Friend, if he needs any assistance, in his reply to the hon. Member for Banff (Mr. Watt). I draw the hon. Gentleman's attention to the intervention of the hon. Member for Perth and East Perthshire (Mr. Crawford) when my right hon. Friend the Secretary of State made his statement on 22nd March. The hon. Member for Perth and East Perthshire, speaking for the Scottish National Party, said:
Is the right hon. Gentleman further aware that the Labour Government are presiding over the destruction of the steel industry in Scotland and that the voters of Garscadden will have a chance to say what they think about this on 13th April".—[Official Report, 22nd March 1978; Vol. 946, c. 1519.]

Mr. Lambie: I am grateful to my hon. friend for that intervention. Not only did the voters of Garscadden take the opportunity, the voters in the regional elections in Strathclyde and throughout the length and breadth of Scotland took the opportunity and showed their faith in Labour national and local representation.
I should be very grateful if the hon. Member for Banff (Mr. Watt) and his hon. Friends would come down to North Ayrshire and convert their Tory friends who, unfortunately—or perhaps it is fortunate—are in the SNP at present, because they certainly need education on what should be the future of the steel industry in the West of Scotland and the development at Hunterston.
I was making the point that the BSC is mothballing £150 million of investment. The Industrial Commissioner of the EEC, Viscount Davignon, has already issued his scheme, which clearly states that there should be no increase in the overall capacity of the steel industry in the Common Market. But he also states that if an increase has to come about it must come in the electric arc sector. In fact, he is carrying out a policy contrary to that being carried out by the BSC. It is increasing capacity in the overall sector and reducing capacity by cutting out electric arc investment which was committed under Beswick, instead


of going ahead as the Industrial Commissioner recommends.
As a convinced Socialist who believes in nationalisation, I have now reached a position at which I must make up my mind. If the BSC is not given the money by the Government to invest in Glengarnock in the reheating furnace or to continue its investment in Hunterston with the electric arc furnace, I should like to see the plant at Glengarnock or the site at Hunterston put up for auction. If a nationalised industry in Britain cannot find the money to continue the investment at this unique site at Hunterston, if someone else can find the money, I am prepared to say "Allow them in"

Mr. Nick Budgen: Quite right. Very good.

Mr. Lambie: Constituency Members are in difficulty. I cannot see myself supporting policies that might mean an unemployment rate of between 35 per cent. and 40 per cent. in my area when I have a site unique in Western Europe waiting to be developed and not being developed because of the wrong policies of the BSC.

Mr. Budgen: rose—

Mr. Lambie: I am not giving way on this matter. I have given enough evidence to the Tories without helping the hon. Gentleman.
I am prepared at this stage to tell private interests or foreign interests that if they want to come in to develop Hunterston they have my full support as a Labour Member and supporter of this Government. If they want to develop it, they should be allowed to come in. If the BSC cannot find the money, we can find it from these other sources.
My hon. Friend who winds up the debate must provide answers on this matter and answers to the various questions that I have put. I welcome the Bill, because it will secure the future of the United Kingdom steel industry. But for the Bill there would be a complete collapse and breakdown of that industry.

7.28 p.m.

Mr. Richard Page: I wish to make two quick points, the first being of a general nature and the second

of constituency interest, as I am one of the few Conservative Members with a steel works in their area [HON. MEMBERS: "Not for long."] We all say that sort of thing. Let us wait and see. I should welcome a General Election today to prove the point. I am fairly confident of what the result would be and maybe there would not be so many Labour Members coming back.
The amendment made to the Bill is to provide another £1½ billion over three years, and I have no doubt that all parties recognise the extreme importance of the steel industry to the United Kingdom. The BSC needs the money and it does not matter whether it gets it in a lump or in three stages, with reviews and investigations. But, equally, I believe that it will need a great deal more money than this, as BSC will use up this money and within the three years will be in exactly the same position again, near the top of the borrowing limit and probably calculating whether it can finance its plant renewals, replacements and maintenance out of revenue, leave alone considering any forms of new investment.
In saying this, I bear in mind that the current rate of renewal and repairs is costing some £400 million a year and that the Corporation in the last four years has managed to obtain only one-sixth of its requirement for its investment capital from its own internal revenue. When one puts that against the 50 per cent. that was planned, it does not give a very optimistic view for the future. Possibly I am being a little pessimistic. I hope that I am. But with the past record, the present world recession, and the series of assumptions in projecting the 1978–79 likely trend of trading results, British Steel has a very long and unenviable slog before being able to attain a viable position.
I cannot see how any corporation which has to operate at 92 per cent. capacity to reach profitability has the slightest chance of achieving it within three years. It is a daunting target to put before management and men, and the House must back the Corporation. It must not lose its nerve. It must put its faith firmly behind the Corporation. But in doing so it must ensure that it does so sensibly and that the Corporation does not embark on wild investment


programmes which have very little chance of achieving even a modicum of success.
However, with this rather gloomy outlook ahead, the Corporation is starting. I think, to be a little more realistic on several points. One in particular in the forecast is the assumption of the rate of inflation. It is nice to see that it is being realistic, with a figure of 10 or 11 per cent. because I cannot see that the Chancellor of the Exchequer's 7 per cent. will come into effect. I think that the Corporation has faced reality as I believe that we will indeed be into double figures of inflation next year.
From the British Steel Corporation's point of view, it will also be extremely difficult to calculate the effect of this increasing and growing mood by the EEC towards what is euphemistically called
orderly marketing and price stability".
which I understand to mean protectionism. I do not say whether that is good or bad, but it will mean a very fine calculation within the Community as to just how much support will have to be given to the various steel industries, particularly in relation to the effect that it will have on the profitability of steel users and consumers within the Community.
It seems, however, that when times of crisis come round certain of our more important industries create and attract vast criticism. I often wonder whether the fault lies within these industries or within their managements, or whether it is because we—and I mean here not just the Government or the Opposition but the establishment "we"—have been slavishly following a "bigger is better" policy for far too long. That does not mean to say that large ownership is wrong—such as nationalisation. I do not want to be drawn into the argument whether nationalisation is a success or a failure. But I believe that the fault in most of our large industries today lies in there being far too many centralised functions and not enough initiative, decision-making and permission being given and being allowed to take place at plant level.
I believe that many companies, while not going wholeheartedly towards Schumaker's "small is beautiful", are now following a decentralisation policy, and I hope and believe that I can detect in the BSC an attempt to shift to some-

thing more approaching a private corporate approach—the flexible restructuring of the finances—rather than having a rigid adherence to some specific long-term planning goals.
I give a small but potentially highly damaging example of over-centralisation, over-Government control and over-Government interference concerning the state of the present self-financing productivity deals under negotiation in British Steel. There we have one Government Department with one set of criteria of acceptance while another Government Department has a completely different set. Management sits somewhat in the middle, endeavouring to explain to sections of the work force why some of the provisional agreements in these productivity deals still have not been implemented three months later. It needs little imagination to think of the feelings of the work force having originally reached agreement on these schemes three months ago.
My final point is on a constituency matter. I have been very fortunate in having a steel plant in Workington which is just profitable. That in itself, for British Steel, is an achievement. But it is profitable, and it also has extremely good labour relations, which bears out the point that several other hon. Members have made. It is worth mentioning, too, that in the 1970s the plant faced a very difficult decision. It had been making steel for many years, but it had to make a decision on whether to stop making steel—and I can understand the trauma in the minds of hon. Members when they are suddenly faced with steel-making suddenly stopping in their constituencies. That hard decision was faced in Workington and it was decided to turn to and concentrate more and more on rail and sleeper production.
The plant has done it. It has been a hard period, but it is now working out right. Having gone through the subsequent reorganisation, the works is now in an extremely strong position, able to tackle practically any rail order in the world, provided, of course, that the customer has the money to pay.
The only thing that I am asking on this point is that we should give urgent consideration to refurbishing one last bit of the plant. Money has been put in for the rest, whether by this Government or


by the Conservative Government, and while the works can soldier on for a few years with the present coke ovens, it is necessary to finalise the investment and also, incidentally, to improve the environment of the town of Workington.
I was rather disappointed that the Secretary of State for Industry at Question Time a few weeks ago, when I asked him about the future of the coke ovens, said that the application would be reviewed some time next year. A plant should know whether it is to get some investment, whether it be in one, two or three years' time. Surely the corporation or the Government Department can plan that far ahead and come up with the answer. This work has to be done, and the quicker it is done the cheaper it will be. I recall the old saying that it is better to back a winning team, and in the Workington steel plant we have a winning team.

7.38 p.m.

Mr. Stan Crowther: I was pleased to hear the hon. Member for Workington (Mr. Page) stress the importance of the industry and the Bill, because at least one or two of his hon. Friends made it clear in the debate that they could not care less if most of the industry was closed down. I am glad that there is someone on the Conservative Benches who sees the importance of our steel industry.

Mr. Mike Thomas: But how will the hon. Member for Workington (Mr. Page) vote?

Mr. Crowther: My hon. Friend will have to ask the hon. Gentleman about that.

Mr. Richard Page: I shall vote for the best means and the best ability for Workington.

Mr. Crowther: When I gave way I really thought that the hon. Gentleman was going to tell us something.
If I were making a constituency speech, I should simply congratulate the British Steel Corporation on its far-sighted decision to install continuous casting at the Templeborough end of the Rotherham works and leave it at that. I could say how wise it is to do what my hon. Friend the Member for Rother Valley (Mr.

Hardy) and I have been telling it to do for a long time—back the winners, and so on.
But I want to take a rather broader view than that. I am going to express my disappointment with the document "Prospects for Steel". I make it clear that my criticism is made from the standpoint of one who is a friend and supporter of the nationalised steel industry. I am not criticising the document from the point of view of someone who is against the industry, but the main message in it seems to be that no one really knows what the prospects are. That is what is worrying me about it. I appreciate the reluctance of the BSC to make any forecasts, considering how wrong the forecasts have been in the past—not only the Corporation's forecasts but the forecasts of everyone else in steel throughout the world.
I can understand the BSC's not being anxious to make forecasts, but when it allows itself a margin of error of 30 per cent. in its estimate of liquid steel production—not in the distant future but only four years from now—I wonder how anyone can be doing any planning at all inside it. I certainly wonder on what criteria it has decided that some projects will go ahead and some will not, if it is so much in the dark about what the future holds. The BSC has some fairly considerable research facilities, and I should have thought that it could have produced something rather better than that.
Underlying the whole of the document the basic theme seems to be that we are at the mercy of forces over which we have no control. This is the complete antithesis of positive planning, which is concerned with making things happen, not with merely making contingency arrangements in case they happen. No attempt has been made, I am afraid, to set out any kind of objective in terms of capital investment for the distant future, or in terms of production levels or manpower requirements. How on earth the technical colleges, for example, can put on the necessary courses if they have not the faintest idea what the manpower requirements of the industry will be, I do not know.
Most important of all, there is no suggestion of any arrangements being made to safeguard supplies of raw materials.


In this connection, I express the concern that I have previously expressed about the safeguarding of scrap supplies, on which the Rotherham works depend. My anxiety was certainly not alleviated by the Select Committee report, because the information set out on page 75 of the minutes of evidence very starkly confirms the suspicion that many of us had—and still have—that any substantial upturn in demand for steel will find the British steel industry once again totally unprepared.
It has happened time after time since the war, under private enterprise and public ownership. On many occasions I have seen the Rotherham works in grave difficulties and, in fact, on short time in a period of high demand, because there has been a shortage of scrap. It has happened over and over again, and I am afraid that the danger of its happening in the future is even greater, because the competition for scrap supplies will incerase as a result of the development of new electric arc production facilities, despite what my hon. Friend the Member for Central Ayrshire (Mr. Lambie) said about it. Arc smelting is increasing in the world in general; therefore, the demand for scrap will increase. Not only will there be difficulties in securing the right amount; it will be difficult to secure the right quality of scrap at the right price.

Mr. Lambie: The value of the Hunterston site is that when our electric arc furnace is built it will not use scrap. We have the only two direct reduction plants in Britain. They are the most modern in Britain or Europe, and it is these plants that the BSC intends to mothball.

Mr. Crowther: My hon. Friend has anticipated my very next point. I am extremely concerned about this news. It may well be that the pelletised iron which that very plant can produce will be needed in works such as Rotherham in due course, when there is a shortage of scrap.

Mr. Lambie: Over my dead body.

Mr. Crowther: I am sorry about that.
The point about the danger of scrap shortage was made to the Government by the Select Committee in recommendation 21. I am afraid that the Government's response is altogether too complacent. I

hope that they will have another look at that.
The essence of what I am trying to say is that up to now the Corporation and the Government—and certainly the trade unions—have not had sufficient say in the long-term planning of the industry. These bodies should not just be looking at the prospects for steel; they should be making plans for steel. This is where we are going wrong. We are being carried along, we are drifting on the tide, instead of attempting to control events. We need a plan that will set out realisable objectives, both short-term and long-term and will give the men in the industry a sense of direction and security which is, I am afraid, largely missing at present.
Among other things, the plan must be concerned with creating demand. I do not accept the idea that there is nothing that we can do to affect the demand for steel and that we can only wait upon world events. I am sure that the Government, with their enormous economic influence in all kinds of ways, could stimulate demand for steel in the home market on quite a considerable scale. I shall not go through a catalogue of suggestions; I shall mention only one example—the construction industry. It is already using a fair amount of steel, but there is enormous scope for steel being used in that industry as a substitute for timber. I do not know how much work is being done on this, but the use of steel in this way could have a considerable effect.
It must be remembered that there are powerful enemies of our public owned steel industry. There have been signs of it on the Conservative Benches tonight. We all recall, no doubt, that not long ago the hon. Member for Eastbourne (Mr. Gow), under the Ten-Minute Rule, sought leave to introduce a Bill to denationalise the industry. Almost the entire Opposition voted for the motion, including the right hon. Lady the Leader of the Opposition. Therefore, we must presume that that is now official Conservative policy. Conservative Members have kept quiet about it tonight, but some of them let the cat out of the bag when steel was last debated.
There is no doubt that there are enemies of the publicly owned steel


industry. Bearing in mind that anything which does not make a profit is intrinsically evil to Conservative Members, I can only assume that if they denationalise the industry they will sell off the profitable bits and necessarily close down the rest.
The hon. Member for Kingston upon Thames (Mr. Lamont) assured us some time ago that if the BSC were a private company no one would lend it any money. If that is so and the Conservatives were to introduce a Bill to denationalise the industry, clearly most of it would have to be closed, because no one would carry out the kind of operation that this House is carrying out tonight in putting up the money to keep the industry in operation.
The weapons which the industry needs to defend itself are not there yet, and I hope that in the future we shall see a clear plan which will show the way ahead for the men in the industry and for the management, and provide the necessary security which is somewhat lacking at the moment.

7.49 p.m.

Mr. Anthony Nelson: I must express some regret at the tenor of the debate so far. It has always seemed to me to be very important that there should be, as far as possible, a bipartisan approach to the British Steel investment programme. It is certainly true that since 1972 or 1973, when the programme was initiated, despite certain policies of Government, whether they involved price control or, more recently, substantial cuts in projects, there has been a large degree of acceptance by both major parties in this Parliament of the need for a viable British Steel Corporation involving a considerable input of public money for the purposes of regeneration, for reinvestment in plant and equipment.
It is very sad that we should now be debating a substantial increase in the borrowing requirements after a traumatic and terrible period in terms of the profitability of the Corporation, when much of the original purpose and the original rapport has been increasingly brought into doubt. It is, nevertheless, important that we should be cautious about sanctioning a Bill such as this. The losses of the British Steel Corporation last year alone

and prospectively this year form a considerable proportion of the public sector borrowing requirement. It is right, having taken one measure through the House—the Iron and Steel (Amendment) Act 1976—and having received certain assurances at that time, which were not matched by reality, that we should not allow the same things to happen again without asking for more information and security for the taxpayers whose interest we are here to represent.
However, I join those hon. Members who have welcomed the improvement in the financial information that has been made available, particularly by the British Steel Corporation. The publication "Prospects for Steel" is a welcome advance, to which I pay tribute. But I have always said that we should have, if possible, a full prospectus setting out in more detail the prospective cash flow and market conditions that will affect a major investment or subscription of this kind. I recognise the severe difficulties and uncertainties that are bound to exist in this industry, involving such a significant section of the economy. Nevertheless, more information could have been provided to enable us to make our judgment this evening.
I am disappointed with the tenor of the debate because I genuinely believe that the Conservative amendment is modest, should be regarded as reasonably uncontentious, and does not technically prevent the Government's allowing for a proper review period. I should like to see two Bills introduced. It is wrong that we should be considering a Bill for an overall amount of money, the second portion of which will be triggered off by an order in a couple of years' time, without knowing the circumstances that will force such an order to be introduced. As it is such a considerable sum of money, running into hundreds of millions of pounds, it should be introduced under two separate Bills.
It is difficult to accept the proposition that if the Bill is not given a Second Reading tonight, in some cataclysmic way this will destroy the confidence and budgeting of the British Steel Corporation. In any case, the Bill will not come into operation for another year because of the cash limits. Therefore, there is plenty of time in hand to ensure that if legislation is presented it is passed as good


legislation rather than defective legislation.
The background and objectives of the Bill are different from those prevailing at the time of the discussion of the previous Bills, namely, the Iron and Steel Bill 1975 and the Iron and Steel (Amendment) Bill 1976. This Bill has raised a number of fears which were expressed Bills. There is little indication from the during the passage of those previous comments that we have had from the Government Front Bench today that the uncertainties of the future will be any less than those of the past.
In 1976, when we last considered the raising of the borrowing limits of the British Steel Corporation, it was forecasting project expenditure of £4,000 million. It was also expecting to spend £1,000 million on working capital. Of that £5,000 million, £2,000 million was to be met from internal resources. At that time many of us expressed concern and reservation in Committee. It is easy, with the benefit of hindsight, to say "I told you so", but because we are considering a similar Bill it is important to itemise this carefully. I asked the Minister in Committee:
Will he try to substantiate that £2,000 million figure,"—
—that is, internally generated resources—
and has he personally looked at it closely? Is he satisfied that it really is viable and will come onstream?
The Minister, in reply, said:
In aiming at these profits, the corporation is looking for a strong recovery in its sales volume, and there are good prospects of that. Whenever I travel abroad—I have just come back from one of the British Steel Corporation's markets in South America—I find that the corporation has a good reputation and that there are promising markets for it abroad as well as, of course, in this country.
Therefore, the BSC is looking for a strong recovery in its sales volume and for increased operating efficiency."—[Official Report, Standing Committee G, 8th June, 1976; c. 58.]
The Minister was careful to state that one had to be circumspect about estimates in the future. It was right that, in answer to a question, he should make a judgment at the time.
The reality since has shown, as is acknowledged in the White Paper "British Steel Corporation: the Road to Viability" that the demand for steel has fallen by 23 per cent. over the last

five years instead of showing a continued growth as was then expected. There has been a growth in world capacity for steel manufacture which, coupled with intense competition, has lowered prices and therefore margins for steel producers. The recession generally has reduced demand.
As a Parliament, we were wrong at that time. That is being generous to the Minister. The Minister was wrong then. It is possible that we shall be wrong again in our assumptions, although our assumptions on this occasion are more pessimistic and circumspect than those made at that time.
The second reason for my belief that consideration of the Bill is different on this occasion is that the investment programme has been slashed, if not almost abandoned. There was the closure of the high-cost Beswick plants in 1978 and 1979, the closure of the Clyde ironworks, Hartlepool and East Moors steelworks, and the dropping of the new projects at Port Talbot, Shelton and at Ravenscraig.
This indicates that the programme adopted for most of this decade is taking on a very different shape. Therefore, the original reasons why we as a Parliament sanctioned a substantial amount of public investment in this Corporation are worthy of review. Although we gave broad consent to the passage of the previous Bill and did not unduly hinder its progress, I argue that because of the substantial change in the investment programme this Bill is worthy of much greater consideration.
The new programme, basing its priority on improving quality, on essential replacements and on increasing the working capital, makes one wonder where our steel industry is going from now on. I have always felt that there is a place for the steel industry in this country. I believe that it makes an important contribution, not only directly but indirectly, to our economy and balance of payments.

Mr. John Ellis: I take it that the hon. Gentleman voted for the proposition that the steel industry should be denationalised. It has been said by the Conservative Party that with the present overproduction there are no buyers in the world. Therefore, there will be a bit of profitable steelmaking of specialist steels which have been flogged off to private buyers, and there will be no future for our


industry. Is the hon. Member for Chichester (Mr. Nelson) in favour of denationalising the industry?

Mr. Nelson: As far as I am aware, it was not nationalised in this Parliament, so I personally had no opportunity to vote on the matter. However, it is a fair question. My view is that for the foreseeable future a substantial, if not the major, part of the British Steel Corporation is and will remain a nationalised industry. That will be so under the next Conservative Government. That is the reality. I accept it and welcome it. I am a believer in a mixed economy.
I recognise that there has to be a public sector, but that does not prevent my saying that where things can be independent and independently financed, one should protect the taxpayers' interest by seeking those alternative means of finance. When there are desperate areas of social demand, such as hospitals, how can one justify diverting scarce public resources—our taxpayers' money—into retaining or even buying industries, companies or parts of major conglomerates that are self-supporting and happy to continue in the private sector? This is a wider argument, which is particularly relevant to the National Enterprise Board, but I do not wish to stray that way now.
I regret that there has been a widening of the rift in the bipartisan approach that has been applied to the investment programme today. Many hon. Members on the Government Benches have failed to understand the genuine concern and fears of my hon. Friends, which are not directed towards bringing down the BSC. We all have an important interest in ensuring its viability, but we are determined to ensure that there is a greater degree of accountability and that some of the massive losses of the past do not recur.
The financial situation of the Corporation, with a loss of £400 million estimated for the current financial year, is a frightening prospect at a time when we had great hopes for the results of some of the investment in new steelmaking equiment and plants.
It is tragic that we should read in the Corporation's own document:
The Corporation's projection reflected in the Government's financial statement and

budget report is of a loss of about £400 million. This is an estimate to which management action is being vigorously directed.
It is a sad reflection that management will really have to work hard this year to create a £400 million loss. We have a great deal to learn from the past in determining how to behave in future towards this industry.
The present borrowings of more than £3,070 million will bring the Corporation up to its cash limits before the end of this financial year. We recognise that there will be a need for a Bill such as this to be passed, but it is proper that it should be passed only on the basis of considerably more information being provided and Parliament having the ability, during the course of the investment, to make comment and, if necessary, to have the sanction of refusing payment.
I read with interest the White Paper on the relationship between the Government and nationalised industries. In recent decades successive Governments have wrestled with the nature of their relationship with the nationalised industries. My approach is that, as far as possible, we should adopt the commercial, banking approach of ensuring that money is made available where it is deserved but that detailed information is provided and that, in the meantime, the highest degree of autonomy possible should be given to the people of ability in the industry to expend the moneys.
The Government's approach outlined in their White Paper has moved increasingly away from this towards more intervention. I predict that there will be substantial problems with such an approach. Indeed, the potential problems have been reflected in the debate with the inevitable pleading for constituency interests. That is a wholly honourable and proper activity in the House, but in overall terms one cannot expect Ministers, a Government or a Parliament to sanction or refuse payment on the basis of the excessive balance of representation of one area.
It is for that reason that nationalised industries and various other agencies within Government are given a relative degree of autonomy, but Parliament should have greater sanctions and greater powers of accountability. We ought to be able to adopt a bipartisan approach on this aspect. I find it dispiriting for the next 25 years, during which time I hope


that there will be a steel industry which can return to profitability and employ a substantial number of people, that we still adopt these old divisive approaches when there is a great deal of common ground to be built on.
Even if the investment programme of the BSC were larger than that set out in the White Paper and its own document and the Government proposed an even greater increase in the borrowing powers, the reality is that much of that investment would flow into plant that would not employ as many people as have been employed in the past. Even if the investment programme were greater, there would still be a severe structural employment problem.
The international situation will have a severe impact on the projections and many of the assumptions set out in the Corporation's paper. It is assumed in that paper that rates of inflation will not significantly change, that interest rates will remain unaltered and that the gross domestic product will return to historical rates of growth of 2½ per cent. Sadly, but realistically, one must express doubts about whether this will be the case under any Government in the next few years.
Is it not, therefore, better to ensure that Parliament has a greater right of review before this considerable further amount of money is expended? There is a case for improving the analytical information made available to Parliament and the presentation of that information—although some progress in that direction has been made.
Our amendment is in the best interests of British steel, the workers in the industry and certainly the taxpayers, whose interests we are here predominantly to represent.

8.6 p.m.

Mr. Edwin Wainwright: I listened intently to the speech of the hon. Member for Chichester (Mr. Nelson), but I was not sure which way he was going. He seemed at times to be supporting the nationalised industry to the hilt, but at others seemed to be criticising it unduly. I wonder why.
In the end he said that he would allow the industry to be run as a commercial enterprise but that a very tight hold should be kept on everything it did. That means that he has no faith in those who

have been appointed to run the industry. I do not believe that we should take that attitude.
I have waited quite a while to take part in the debate and while I was listening to the other speeches, I thought that I had better disapear because so much criticism was levelled at the Sub-Committee and the way the industry is being run.
We have to look back at the history of the industry, not just to 1973–74, but to 1967 and earlier. Parliament has always had a strangehold on the industry and has always put restrictions on it. If it has not been run successfully, hon. Members have made a lot of criticisms. For at least three decades the steel industry has been, slowly but surely, not keeping pace with its international competitors. We all knew that, but we did not do a great deal about it.
The Sub-Committee considered the tonnages produced per year by each employee in this country and compared them with production in our competitor countries. We saw that there was a great difference. Our output was 118 tonnes, National Steel in the United States had a production of 280 tonnes, in Germany, Thyssen's production was 370 tonnes and Nippon Steel production was 520 tonnes per year. Why is that? The reason is that, even in 1967, experts said that the industry, which was being renationalised, needed at least £3,000 million. Because of the conflict between Governments, no one has been able to get down to producing a straightforward plan to bring the industry up to the level of its competitors.
The British industry has been starved of money and when the oil crisis and the world recession started, everyone looked for someone to blame and the BSC took the blame. Who could have foreseen those events in 1972—except the mining MPs who warned both Governments about the potential dangers in the sources of our oil? No one took any notice of us, but the crisis happened—though not in the way that we expected—and the shortages started.
At present Japan is spending £81,147 per employee per year. That compares with Britain's £13,943 per employee per year. Little wonder, therefore, that Britain's overall output is 34 per cent.


of that of Japan's. When a group of us went to have a look at the Japanese system, we saw a vast difference in technology. The hon. Member for Chichester spoke about spending money in investment and the reduction in the number of jobs. That is true. Whenever one increases technology, the number of jobs is bound to go down unless one increases the markets. If we do not do so, we cannot compete in the international arena. That is one of the mistakes that we make.
I feel very sorry for some of the steel plants in this country. I saw the rundown which occurred in the coalmining industry and the effect that that had on districts and villages. If we develop our steel industry, particularly during the current recession, there is bound to be over-production. I have always agreed with the common sense view that it is no good producing anything unless we can sell it or consume it ourselves. But there is bound to be over-capacity because of the world recession. Even Japan has at least 30 million tonnes of extra capacity at present, but Japan will sell that if it is a question of maintaining her industries.
I expect that is the reason why there is talk of restriction of imports. Many of my hon. Friends are concerned about imports, but I have very great reservations. Being a market nation, I fear that if we close our borders too tightly, borders will be closed against us. As a result, certain markets will no longer be open to us and that factor must be taken into account.
We must continue our investment in the steel industry. I see my hon. Friends the Members for Sheffield, Heeley (Mr. Hooley), Rother Valley (Mr. Hardy) and Brigg and Scunthorpe (Mr. Ellis), all of whom have steel plants in their areas. Up to a certain point those plants were successful until the recession came. Although I feel proud of what has hapened in the Sheffield and Rotherham districts, there are some other areas about which one is deeply disturbed. My hon. Friend the Member for Stoke-on-Trent, Central (Mr. Cant) has Shelton in his constituency. I have met some of the work force from Shelton and I have a very high respect for them. They have fought very hard to keep their plant

open. I am not quite sure whether they will succeed, but at the end of the day, unless we can produce steel for our own home consumption in competition with other nations, we shall lose out in manufacturing industry.
When we compare our manufacturing industry, and investments in it with overall figures, we lose out badly. That is something which we must always bear in mind. I recommend Conservative Members to have a look at the National Westminster Bank Quarterly Review. That shows that manufacturing industry—private enterprise—rather than the steel industry is letting us down with regard to investments. One has to bear that in mind. We must ensure that we reach a high standard of technology. But, unfortunately, when that occurs, especially during a recession, there is a great danger that the economy will be gravely affected and that jobs will become scarcer. On the other hand, if we do not do so, jobs will still be fewer and our standards will be lower.
It is no good people thinking that we can have a reasonable standard of living unless we produce the wealth of this nation. This is where the steel industry is one of the barometers of the economy. Steel gets involved in every other industry. There are very few industries which one can mention in which steel is not involved.
I warned the Sub-Committee that any recommendations which emerged would be dynamite because they would mean a reduction in manpower. But without that happening we shall not have a viable and efficient steel industry. I concede that some plants are making money at present. Four of my hon. Friends and two Conservative Members have spoken about them. They appear to blame the Sub-Committee for what has happened to the steel industry, but it was the Sub-Committee's job to look at the industry and to make certain recommendations about it.
When I read the Government's reply to those recommendations I was greatly pleased. Considering the furore which occurred when we last debated steel, I fully expected that Members of the Sub-Committee would get their throats cut. But I do not think that I can find much fault with the recommendations.


One, of course, is in dispute. That is recommendation No. 30, mentioned by the hon. Member for Come Valley (Mr. Wainwright), which talks about the amount of money for investments and current expenditure. The Sub-Committee was deeply troubled about what would happen if the recession continued. Unless we continue the amount of money for those investments I am certain that we shall not succeed. That is the reason why that recommendation was made.
I do not know what other members of the Sub-Committee feel, but I stand by that recommendation. Unless the Government make certain that sufficient money will be given to capital investments, the industry will find that it will not be able to carry on with its current expenditure because the costs will be too high.
I know that some of my other hon. Friends, who are much more involved than I, wish to speak. But I should like to say a word about redundancies. There are bound to be redundancies. I have heard Conservative Members criticise the amount of money that would be involved in redundancy payments. During the depression I was out of work for a period. Everyone ought to realise what being out of work means. Everyone should realise what it means when a man who has been trained for only one job at the age of 15 or 16 suddenly discovers at the age of 40 or 45 that there is no more work. Yet we are told that £10,000, £13,000 or £14,000 is too much money. If any of us suddenly were placed in the same position, I wonder what he would say about the amount of money proposed for redundancy payments. I beg the Government, through the BSC, to be generous where redundancies have to occur. Of course, the best solution of all would be to supply jobs in these areas. If we could do that, we could lessen the impact of the blow.
I hope that the Minister will take note of what right hon. and hon. Members have said today. I have a great deal of sympathy with them because I know in my heart how they feel and how the people feel when their jobs are in jeopardy. If we cannot keep their steel plants open—and in my view we should give serious thought to the possibility of selling them—we should at least do more than we have in the past to bring new

jobs to these areas. If we do not, we shall have failed our people.

8.21 p.m.

Mr. Tony Durant: I rise to speak mainly on behalf of the taxpayer, because in my view we have a responsibility to take his views into account when we are discussing a matter of this kind.
I sympathise with the hon. Member for Dearne Valley (Mr. Wainwright). I know his part of the world, as I do the Bother Valley and Rotherham. I know how crucial are the steel and coal industries to their constituents, and I understand their anxieties. However, we also have to appreciate the anxieties of the general public when the money provided to the steel industry is increased again and again. We are now asked for £5,500 million. In 1966–67, the limit was £950 million, as it was again in 1967–68. Then, in 1976, it went up to £4,000 million, Now, it is £5,500 million. This escalation is worrying in the extreme for the broad mass of our voters who have to meet that in the sense of advancing it. Then the loan has to be serviced, and an enormous debt has to be met.
The problems of the nationalised industries are very difficult. Constantly, Governments interfere with the policies that they follow and, constantly, they interfere with the managements of those industries and give them very little chance really to follow a steady programme and make steady progress. This is one of the problems that they encounter.
We have to realise that we have two types of nationalised industry. We have nationalised industries which provide services, such as the railways, and which have a social requirement. But when it comes to British Steel and British Leyland we have industries which are competing in the commercial world, and they have to face commercial realities. They also have to face international implications in competing, and this is a factor which must be taken into account far more than it is by Governments.
It must be depressing to be a manager in the steel industry, with all the publicity that there has been about it, and with the future slightly uncertain because the industry does not know where it is going. It must create tremendous difficulties There have been considerable changes


at the top. One hon. Member said that he felt that we should make more changes at the top. However, we have had three different chairmen in the not-too-distant past, and I think that that is enough trauma for any industry.
We have seen a fair amount of excitement in the Press recently. We have seen the Leader of the House having exciting meetings in South Wales with his constituents about one steelworks, we have had the changes of chairman that I have mentioned, we have had the sudden enormous deficit that no one knew about, and we have had the report of the Select Committee. I respect the hon. Member for Dearne Valley and his work on that Committee. This has been a most valuable report, and it should not be pushed to one side. A lot of work was done on it. It may be that some of its recommendations are controversial, but it has made a valuable contribution to the general discussion of this important industry.
If the BSC were a commercial organisation, its board would be meeting, it would be rationalising the industry, and it would be looking at specialisation, because that is its profitable area. Instead, we are still going for heavy steel, and this is one of our major problems.
Of course, there may be an upturn in the economy. It is argued that if that occurs, there will be a sudden demand for steel and we must have the capacity to meet it, and, therefore, we must keep certain works open.
My hon. Friend the Member for New Forest (Mr. McNair-Wilson) said that he was not frightened of under-developed territories and their steelmaking capacity. I am afraid that I am. There is a problem with the under-developed territories. There is prestige in having a steelworks, and many under-developed countries are opening steelworks for prestigious reasons almost more than for marketing reasons. Korea is a perfect example and, though my hon. Friend said that the standards of their steel were not very good, he is living in cuckoo-land if he thinks that the Koreans will not get it right fairly quickly. He should not think that we have no need to worry because the steel is of poor quality. That is a little unrealistic.
We as Members of Parliament are the bankers of the steel industry. If a commercial undertaking went to its bank

saying "We want to engage in rationalisation because we are losing money in this area and in that", the bank manager would support it. He would not say "I have some friends in that company. They are decent chaps. You had better keep it open." He would take a commercial look at it. We have to face this fact. If we do not, we shall be asked for more money later, and more again and, sooner or later, the crunch will come. The longer it is left, the worse the situation becomes. We have seen this escalation of debt, and suddenly we face an enormous problem.
The Select Committe made one or two interesting recommendations regarding what Parliament should do about the steel industry. Let me quote two of them from the First Report. Paragraph 106 reads:
Of equal importance, the failure of the Corporation and of the Government to submit accurate forecasts to Parliament severely reduces the ability of the legislature to carry out its statutory duty of controlling the Corporation's borrowing.
It is clear that we have a statutory duty to control it.
Decisions are taken and legislation enacted on the basis of information which, however well-intentioned, has in the past been grossly misleading. Your Committee recommend that the Corporation and its sponsoring department should seek to improve their financial forecasting, not least so that reliable estimates can be laid before Parliament.
Here the Committee is making a positive statement to this House about the way in which we should approach the subject. That is why the Opposition are critical of this Bill. We think that it is too wide and open-ended and that we do not have the necessary financial control.
The other recommendation of the Select Committee to which I draw attention appears in paragraph 113:
Your Committee recommend that the Secretary of State, in consultation with the Corporation, should give close consideration to the appropriate self-financing ratio. In addition, they recommend that financial commitments for capital expenditure should be authorised only for specific projects which promise to yield an average rate of return, having regard to the opportunity cost of the resources, and the degree of risk involved.
There is a clear instruction to this House, and that is what we should be doing.
The Corporation does not have a good record for output. At full capacity, its output per man last year was only 118 tonnes, compared with 280 tonnes for US National Steel, 370 tonnes for Thyssen


and 520 tonnes for Nippon Steel in Japan. Our production is poor, and since 1974, we have been a net importer.

Mr. Kaufman: The hon. Gentleman will be happy to know that we have now become a net exporter again.

Mr. Durant: I am pleased to hear that and am only too happy to be corrected. In winding up the debate, perhaps the Minister could give the exact size of that export.
The industry's decline has been caused by many things. We have heard about the world recession. The decline in construction of roads and hospitals has also affected it. As representatives of the taxpayer, we have a right to say that the Government cannot make this loan without more parliamentary control.

Mr. Hardy: I am following the hon. Gentleman with great interest, but I am puzzled by an apparent contradiction. First he said that one of the problems of the BSC was excessive interference. Now he seems to be suggesting even more.

Mr. Durant: That is not such a clever question as the hon. Gentleman thinks. Any company in difficulty with its banks will find the bank taking an active interest in its finances, but not in day-to-day details of products, marketing and management. It is not reasonable to ask to see the figures. I am talking of ministerial interference in the day-to-day running of the industry. Shareholders in a private company can talk about finances at the annual general meeting, but they do not ask detailed management questions. So I am not frightened of that question. I welcome it to help explain what I mean.
We must take a serious view of this enormous sum. The Chancellor has been concerned this week about the amount that we have taken from his Budget. But the comparison is laughable. The sum involved there was £450 million. This sum is £5,500 million. I know that one is taxation and the other is a loan, but the money originates from overseas borrowing or the taxpayer. I have a responsibility to express the anxieties of my electorate about this industry and their desire for better control of its finances.

Several Hon. Members: rose—

Mr. Deputy Speaker (Sir Myer Galpern): I wish to be as helpful as I can to

the House. There are still five hon. Members who have sat here all day, who are anxious to take part. If, with the co-operation of the Front-Bench speakers, speeches lasted a maximum of eight minutes, I should be able to accommodate all those who wish still to take part.

8.33 p.m.

Mr. Ifor Davies: Although I heard both opening speeches, I regret that I did not hear many of the speeches of my hon. Friends because of parliamentary business.
The hon. Member for Reading, North (Mr. Durant) said that he was speaking on behalf of ratepayers and taxpayers. I wish to do the same—but the ratepayers and taxpayers I have in mind also happen to be employed in the steel and tinplate industry.
I fail to understand the amendment, which welcomes the steps taken to improve the BSC's financial position but declines to give a Second Reading to the Bill because of the inadequate opportunities to make annual assessments of the progress of the Corporation. The Secretary of State gave a clear assurance that he was in close liaison with the Corporation. I am confident that he will be assessing its progress not merely annually but at frequent intervals.
Several hon. Members have called for a viable industry. That is a unanimous desire, but if there is, as some have said, a partisan note in this debate, the amendment has contributed to it. If we are all concerned about a viable industry, we should be working together and not causing a division on such an important issue.
It is still necessary to emphasise that large-scale but selective investment is essential to make up for the neglect of recent decades. In July 1976 I recall sitting behind the Secretary of State when he announced that we should proceed immediately with the building of the new mill at Port Talbot. The House will recall that after a detailed and protracted study the British Steel Corporation produced its investment strategy. It accepted that on economic, technological and sociological grounds Port Talbot was the right place to expand to enable the British steel industry and the tinplate industry to remain competitive. That strategy is now water under the bridge. It has been deferred.
I was glad to hear, however, in the opening remarks of my right hon. Friend, the commitment to ensure continuous casting facilities at Port Talbot. But I am concerned with the hesitant phrases that are used in the White Paper, Command 7149. I shall quote from paragraph 26. In referring to the continuous casting facilities it states:
The financial evaluation of this has still to be completed and the Government support BSC's wish to secure a renewed commitment of the work force to operate the works at international manning levels and to commission the project immediately on completion.
There is a great deal of apprehension in the note of hesitancy about proceeding with continuous casting facilities when every report, including the Select Committee report, is agreed that there is a necessity to proceed with that part of the investment. I must express regret that there is that hesitancy in paragraph 26 of "British Steel Corporation: the Road to Viability".
Investment is an issue that affects not only Port Talbot but industry throughout South Wales. In various forms the industry of South Wales is interdependent on steel. Above all, our tinplate industry is vitally affected. I say "our" deliberately, because West Wales has been the home of the tinplate industry for the past 200 years. The Velindre plant in my constituency and the Trostre plant in West Wales stand as proud reminders of our great tinplate tradition.
However, the danger signals have gone up. Tinplate users are demanding better quality and closer tolerances. The industry must meet the demands or lose the trade. Hot rolled coil for the tinplate industry comes from Port Talbot. It is a necessity to improve the quality of coil to meet customers' demands. If that is not carried out, it will be no exaggeration to say that the West Wales tinplate industry faces disastrous consequences. The future of the tinplate industry is inevitably and inextricably bound up with what is to happen at Port Talbot.
Great progress has ben made with de-manning. However, because of the time factor and because of your appeal, Mr. Deputy Speaker, I shall not dwell on that. I merely say that a great deal of demanning has been taking place in Port Talbot. Thousands of employees have

left the industry within recent years, which has made a great contribution to solving this problem.
I recognise that the steel industry has been caught up in a most savage recession. Time is not on our side. I urge that there should be no delay in proceeding with the selective investment that has been announced for Port Talbot. The steel industry is the lifeblood of all our industrial activities, and that is particularly so in South Wales.
Therefore, despite all our difficulties, it is imperative to proceed with selective investment. I repeat, the continuous casting facilities are unanimously agreed by the Select Committee and everyone else. Therefore, I urge on my right hon. Friends and ask them to press on the BSC the importance of proceeding immediately with this matter.

8.40 p.m.

Mr. Nick Budgen: I hope briefly to cover two points—the first a general one and the second a constituency one.
I derive support for my first general point from the telling speech by the hon. Member for Dearne Valley (Mr. Wainwright), who rightly said that Parliament has always had a stranglehold over the steel industry. He went on to explain how in 1973 he had been proved right because he had predicted the risk to which this country laid itself open if an oil cartel were to raise prices dramatically. That was a very good illustration of the way in which any industry held in a stranglehold by Parliament is in the grip of assumptions which may be proved wrong. It was a good illustration of how the only way in which industries may survive is by having a variety of different assumptions so that those who get their assumptions right live and those who get them wrong die.
The more one looks at the assumptions that have been and are to be forced upon the steel industry, the more one has to congratulate the Minister on his rather more modest approach towards planning for the future and to say that the last thing that we want is the clear plan that was called for by the hon. Member for Rotherham (Mr. Crowther), because the clear plan is the voice of completely unreconstructed Socialism.
We already have enough assumptions for the next three years, and in some respects at least they are bound to go wrong. Perhaps some Labour Members would agree if I said that the first assumption is:
There will be a modest growth in domestic demand for steel and the recent measures introduced by the European Community to provide for orderly marketing and price stability will continue.
Many Labour Members say that in perhaps three years the Community may be showing signs of disintegration.
Assumption No. 2, which the British Steel Corporation has to accept, is:
Rates of inflation will not change significantly.
Let me consider the rate of inflation argument against my hon. Friends. Many say that the Labour Party is now the party of sound finance. Many say that, in the event of the Labour Party being elected at the next General Election, it will squeeze out of the system even the 10 per cent. rate of inflation which we have at present. Indeed, they might argue convincingly that it will be brought down to 2 per cent. That is assumption No. 3. I do not agree with that view, but that is an assumption that they might wish to substitute in favour of assumption No. 2.
Assumption No. 4 is:
Wage and salary awards will continue in line with Government assumptions.
Which Government? We are bound to have a General Election within the next 18 months. That assumption is projected forward for the next three years. I do not know and I do not think that the Labour Party knows whether it will have any form of State control of wages for the next three years. It could be argued that the Tory Party does not know whether it will have State control of wages. I see the Minister nodding. I very much hope that there will be no Tory State control of wages. But it is a terrible thing for any industry to be lumbered with as bald an assumption as that.
The most mundane short-term assumption that the industry is obliged to accept—I am looking at a document which came out on 27th April—is:
Interest rates will remain substantially unaltered.

Recently, interest rates have gone up from 6½ per cent. to 9 per cent. That is an increase in financing costs of nearly 40 per cent.
Unhappily, as long as nationalised industries are forced to accept assumptions that are dictated to them by the Government their chance of any type of viability are limited. The best that we can hope for its that we should make short-term assumptions and that we should review their progress on at least an annual basis. I should be in favour of even quicker and more modest reviews so that we can ensure that we have none of the grand simple plans about which the right hon. Member for Rotherham spoke.
My second point is one for which I derive support from Government Members. The hon. Members for Central Ayrshire (Mr. Lambie) and Dearne Valley spoke of the need to sell sites. That is an interesting and important recommendation from Socialist Members. I am particularly concerned about the steelworks at Bilston, which is not in my constituency but at which many of my constituents work. There are many old steelworks which do not have vast capital charges hanging over them, which have old and written off plant and are thus profitable. They represent a possible good investment for private industry. They represent a chance for the future for the men who work there. The best hope that they have is that profitable private industry will be allowed to take them over.

8.47 p.m.

Mr. R. B. Cant: The constraints of time will prevent me from making another contribution to what has been referred to as the "taphouse brawl".
The financial aspect of this matter is extremely important, but the strategy which underlies it is more important. I am more pessimistic about the strategy than are many of those who have spoken today. One cannot write off what is happening in the Third world. These nations will develop virility symbols, whether they need them or not. The impact from Korea across the world to Mexico will be enormous.
What is fundamentally wrong with the strategy of the Corporation is that it


has overlooked the contribution that the mini-plants can make. I should have liked to go into more detail about that.
It is interesting to note what the Federal Reserve Bank of Dallas said. The computer to work out the steel programme was in Dallas. No computer in this country was big enough. The bank paid a glowing tribute not only to mini-plants but to the contribution which the developing electric arc furnaces are making in the United States.
Reference has been made to the Industrial Commissioner of the Common Market, who said that he would allow only one addition to plant in the Common Market in the future. He said:
An exception is being made in the case of electric arc steelmaking.
My hon. Friend the Member for Rother Valley (Mr. Hardy) is worried about scrap. We are giving the world almost all the scrap that we have. The Spaniards are having a heyday with it. A grave mistake has been made, in mothballing the plant at Hunterston, by forgetting about the electric arc furnaces. I still think that Shelton has a future.
This morning the steel committee of the TUC met the British Steel Corporation to talk about the future of Shelton and Bilston. I do not know what happened about Bilston, but the steel committee gave 100 per cent. backing to the installation of an electric arc at Shelton. What if the British Steel Corporation turns the idea down? Will the Government intervene and honour the pledge that they gave under the Beswick review, saying that if all the unions on the steel committee want an electric arc furnace the Government will give it the go-ahead?
A further point of great interest concerns the sale of plants. There may be a bit of doubt about the identity of the buyers of plants. I asked Sir Charles Villiers and the man who really runs the BSC, Mr. Scholey, whether I could mention this point. I referred to the letter from a Tory MP—I hope that I spoke with suitable contempt—and to the reply that he had received. I told them that they were giving me an entirely different version, that they agreed that the Shelton plant was entirely clapped out but that they feared the competition it would produce if it were sold.
I want to know who has the last word on the sale of plant. I have a letter from my hon. Friend the Minister of State saying that he has the last word, while Sir Charles Villiers has told me that it is he, not the Government, who has the last word about whether plants will be bought or sold because that is what it says in the nationalisation Act.
I feel that Shelton does not have an electric arc because it is one of the winners. We at Shelton are one of the sucess stories. Shelton is an area which has an unemployment rate of only 3·7 per cent. and can therefore be written off in consideration about the location of electric arcs.
If Shelton or some part of it ever closed we would want the industrial development certificates that are always denied us because we have low unemployment. We would want them to attract any industry that wanted to come to Shelton, Stoke on Trent. I hope that the Minister who has IDCs within his grasp will give me an assurance on the matter tonight.

8.53 p.m.

Mr. Tim Renton: I apologise for having been unable to be here at the beginning of the debate to hear the Secretary of State and my hon. Friend the Member for Kingston upon Thames (Mr. Lamont). I am most grateful to the British Steel Corporation for supplying us all at the end of April with the document "Prospects for Steel". It has proved most useful. I believe that it is a sign that the BSC and the Government are slowly being forced by circumstances back to reality in the steel world.
I do not say that the document told me everything I wanted to know. For example, it is in some respects simplistic about the profound effect of the oil crisis on steel investment. The Japanese have been saying much more plainly that since the oil crisis the emphasis in steel investment must now be on quality rather than quantity. This was the point that some hon. Members have made. The Japanese have realised how much can be done by the increased use of continuous casting. They have raised the yield from steel ingots from 81 per cent. in 1970 to 86 per cent. in 1976, and in this manner they have obtained 7 million tonnes of increased capacity in six years simply by


virtue of increasing the continuous casting installations. I should have liked to see that sort of point developed more in "Prospects for Steel".
I believe that there is an air of much greater realism within the Corporation and, I hope, on the Government Front Bench as well. However, there are a few points arising from the prospectus which still give me cause for serious concern.
I am concerned that in this document, and equally in the Government White Paper in reply to the Select Committee reports, no self-financing ratio of capital expenditure has been set. It is an important discipline for the Corporation that there should be some self-financing ratio, even if it is set at a fairly low limit in the earlier years.
Also there is no sanction on the Corporation's operating account, and no split within the cash limit between expenditure on current and fixed assets. All of us who have the interests of British Steel in the 1980s at heart must be concerned about the temptation for the Corporation to raid capital expenditure to pay wages and to meet current costs.
We saw this in the year just ended where the original forecast was a £50 million deficit on current costs. In the end the Corporation ended with a deficit of £265 million on current costs and this could be financed only by cutbacks in the investment programme.
It is clear that the borrowing limit that we are being asked to approve tonight is excessive if there is to be capital reconstruction in the years ahead. The overall costs of the Corporation in producing its steel melt must be reduced, and in the end this can be done only by more steel being produced at Port Talbot and no hot steel being produced at Shotton. That is a decision that the Corporation, backed by the Government, has ducked for too long. Until it is taken the overall cost of producing hot steel will be too great.
I very much regret that the recommendation of the Select Committee on targets being set for annual reductions in manning levels has not been followed. I appreciate the difficulty in doing this, but it is an important discipline for British Steel and the unions if they are to continue with the necessary capital expenditure. This can be achieved only

hand in hand with the unions, and the Select Committee recommendation should have been accepted.
There is no prospect whatever of being able to remunerate all the borrowings that we are being asked to authorise, unless there is a capital reconstruction. The prospect of a £400 million loss in the year that has just begun is appalling. In the end, if the Corporation is to compete with imports and with the growing private sector—and even though there has been so much world excess production, the private sector is still forging ahead—the Corporation must have internal competition within itself. It must have divisions to compete against each other in the same products for business and orders. Until this is achieved, we shall still have a monolithic giant which will not be able to compete effectively either with the private sector or with imports.
In conclusion, I fear that the rake's progress may continue as before. In this case the rake is getting a little more world-weary and perhaps a little wiser. In view of the large sums that we are being asked to authorise for the Corporation, we should have the opportunity annually to review what it is doing.

8.58 p.m.

Mr. John Ellis: I am very grateful for the opportunity to speak, even at this late stage.
A few months ago we had a Ten-Minute Bill about the denationalisation of steel, for which a number of Conservative Members voted, including the Leader of the Opposition. We must take it that the Opposition policy, therefore, is to denationalise steel. I shall give way readily if anyone on the Conservative Front Bench wishes to intervene at this point.

Mr. Lamont: If I may adopt the phrase used the other day by the Under-Secretary of State for the Environment when he was asked about the nationalisation of land. I wish to point out that it is not a programme for the first Administration.

Mr. Ellis: We now have it on record that it is still firmly fixed in the philosophy of the Conservative party, as enunciated by its Front Bench spokesman, that it intends to denationalise British Steel.
I was disappointed to read in the White Paper that investment would be limited to a sum of £500 million in each of the next two years. I wish the figure were higher. If we are to have a viable steel industry, there must be constant investment, and old plant and equipment must be replenished. A good deal has been said about the smaller plants. I believe that we need large and small plants.
In the few minutes at my disposal, I wish to deal with one of the larger plants—the Scunthorpe steelworks, in the area that I have the honour to represent. Massive investment has taken place in that plant. If it is not making a profit, it is due to the fact that there has not been the requisite throughput. The investment already exists at the steelmaking end of the operation. We have heard that the old blast furnaces at Scunthorpe are to be refurbished, but if that investment is to be capitalised, we need more ironmaking capacity at the other end of the process. The Select Committee recognised that the Scunthorpe steelworks can compete with steelmaking plant anywhere in the world. The Committee said that there was a case for more investment in order to take advantage of the massive investment which had already taken place.
It is ironic that although the Scunthorpe steelworks could produce another 1 million tonnes, there is no demand for good quality, low-cost steel that could compete with similar products anywhere in the world. That is the dilemma.
It has already been said that the present strategy envisages that plans will not be made known and that the process will be a steady one. I do not object to old furnaces being refurbished, but the fact remains that they are still old furnaces. There have been official visits to Scunthorpe recently, and it has been said that Scunthorpe is too far away from the various centres, and all the rest of it. But there must be some commitment to strategic thinking, because the world will not always be as it now is. I believe that at some time or other there will be an upturn. Therefore, we must make use of the massive investment that has already taken place.
It is true that developing countries, including some South American nations, will develop steel-making capacity, but

because there is still a great deal of poverty in the world, there must be a future need for steel. There are people in the world who are still on the verge of starvation, and they live in countries that will require factories, hospitals and schools, all of which require steel. Could we not give development aid in the form of steel?
I am not a pessimist, and I believe that there is a future for steel. We should not constantly look over our shoulders but should look to the future. I believe that there is a need for varying kinds of plant and varying capacities of plant.
The White Paper "British Steel Corporation: the Road to Viability" makes clear that before any action is taken there will be negotiation and prior consultation with the TUC steel committee. Those who are engaged in the steel industry have much to gain because they have a great deal of knowledge of the industry. Therefore, I hope that something more than consultation will be involved, and that there will be agreement.
Those concerned in the industry will have to examine the overall picture in line with Government strategy. We all know that my right hon. Friend the Secretary of State for Industry came from the steel-making industry. We appreciate that there have been arguments in the past on these matters, but the National Coal Board and the National Union of Mineworkers in their area of operations have constantly gone back to the Government in seeking to hammer out some kind of policy.
I hope that "consultation" will not simply mean that they go back again and again, I hope that the trade unionists in the steel committee will be listened to and that the policy will be decided at that level. My hon. Friend the Member for Stoke-on-Trent, Central (Mr. Cant) referred to that and asked some very pertinent questions. The BSC has not been very good at negotiating with anybody or even telling people what its strategy is at any time. I hope that it will take advice and that we can see that it is adhered to.

9.5 p.m.

Mr. Martin Flannery: I have only about five minutes, but I shall try to say all that I want to say in that time.
I am fascinated by the Conservative motion. If we look at it carefully we can see that it is one of those "Have your cake and eat it" motions, because it says "While welcoming steps to improve the financial position of the British Steel Corporation we shall take steps to see that its financial position is not improved." I do not know how they can think up such motions. Unfortunately, it is characteristic. It is a doctrinaire motion to attack a nationalised industry.
Many of those listening to me know that I have spent a great deal of my time in education. I listen continually to the Conservatives trying to prove that they believe in comprehensive education when they do not. Now they are trying to tell us that they believe in nationalised industries when they do not. They have engaged in a foray against a nationalised industry. They were hard put to it to formulate a motion—hence the nonsense on the Order Paper.
I turn to the question of a slump. It staggers me that people do not realise that capitalism carries within itself slump as a rain cloud carries rain. The reality is that slump comes about whether we like it or not. We do not know how to answer it. It is there, a crisis of overproduction, when all the poverty stricken masses of the world are panting for commodities made from steel. We are over-producing steel and yet we are not getting it to them. It is time we addressed ourselves to trying to solve that problem.
I hope that my right hon. and hon. Friends will devote some time to the success story of Sheffield. That is the real reason why I sought to take part in the debate although earlier I had said that I would not speak, because I had another meeting outside for an hour or so and I felt guilty about coming back having missed an hour of the debate.
I hope that my hon. Friend the Minister of State will say that the special steels industry, of which Sheffield is the very centre, is a success story. Our chemists there are trying to make a breakthrough with a very light special steel. It will revolutionise the motor industry if we can make that breakthrough.
The money provided by the Bill is urgently needed. The Conservatives want to curtail the funds so urgently needed. The BSC has been bureaucratic.

I have criticised it as much as anybody has, but I want a successful BSC. The difference between me and the Conservatives is that they want to destroy it. They cannot get away from that. They really want to get rid of the steel industry. Methinks they protest too much. They are always saying that they do not want to get rid of it because in fact they do want to get rid of it.
No Conservative has mentioned any success. All Conservative Members want to talk only about things which have gone wrong yet they must know in their bones that the industry is here for good and that the small factories which many of us support and want to be a success, will be necessary as well. We should like to help them.
Mention was made earlier of Brymbo. I sought unsuccessfully to intervene on the subject. A short time ago I did a programme with Monty Finniston and the previous Minister, who is now in the wilderness from the Opposition Front Bench, like the right hon. Member for Sidcup (Mr. Heath). I am referring not to the right hon. Gentleman himself but to his right hon. Friend who was Minister before. I am not allowed to mention names.
The story of Brymbo was that the Government bought it from Guest Keen and Nettlefolds for about £46 million and spent £4 million to modernise it, making the cost about £50 million. Then the Conservatives flogged it back for £23 million. If they ever get their hands on the nationalised industries they will flog them all to one another. The workers in Sheffield watched them going round various factories saying 'We shall have that and that", taking the best of everything.
Those are the realities. Therefore, in the minute remaining to me I say to the Conservatives "Stop huffing and puffing about the money. We need the money. Industry needs the money. You can go on saying this as much as you want. But our job, yours and mine, is to make the Corporation a success, so let us have the money." [HON. MEMBERS: "Whose money?"] Whose money? It is our money.
If we take £23 million of our money for Brymbo, the money that the workers there have used to make it such a success, we have merely looped the common


exchequer again. We want this nationalised industry to be a success. The Tories keep saying that they want it to be a success but they really want it to be a failure. I hope that my hon. Friend the Minister of State will pay tribute to the areas which are a success and prove to them that all the rest can be a matching success.

9.10 p.m.

Mr. Michael Marshall: This has been an interesting and largely constructive debate, until perhaps the hon. Member for Sheffield, Hillsborough (Mr. Flannery) came in at the end to try to rouse us all to a state of frenzy again. The main point about the debate is that we have had an opportunity to hear some very useful and important contributions from hon. Members representing steel constituencies on both sides of the House. It is one of the main burdens of the Opposition's case that we want to have this kind of debate more often, and it was precisely this view that moved us to draft the amendment as we did.
The fact that the debate has generally been constructive shows the need for this kind of occasion. My hon. Friend the Member for Chichester (Mr. Nelson) was a little hopeful in a sense in not recognising that, as we move very near to the General Election, there are temptations to people to mix it. But we have in this whole argument about the role of the British Steel Corporation to extract the core.
Let us face it: at this time of night the Press Gallery is practically deserted, we can let our hair down and we can talk about what we really think is going on. It would be helpful, I think, in these concluding remarks—and I hope that the Minister of State will reply in kind—to get down to our assessment of the relationship between the House, the Government and the BSC.
A number of basic issues have been touched upon. I will try not to repeat what has already been said. But I think that the first point we have to make about our amendment is that the House has had a long tradition now of being anxious, worried and concerned about its inability to debate steel regularly, and the amendment calls, in effect, for an annual review. It seeks to make sure that the provision

of money is tied to coming back to the House.
As my hon. Friend the Member for Colchester rightly pointed out, it cannot by any stretch of the imagination be regarded as a total blockage. All the Government have to do is show their good will in the matter, and that they accept what is envisaged in the amendment, and we can talk seriously about the way in which sums of money should be apportioned over the next few years on an annual basis instead of on the rather more open-ended proposal before us.

Mr. Mike Thomas: Can the hon. Gentleman give an assurance that should we have the misfortune of the Conservative Party coming to power it will give a day every year to a debate on steel?

Mr. Marshall: If I have anything to do with it, I shall give the hon. Gentleman that assurance. I shall have to let him know how I get on. But I must not be tempted by his blandishments.
The point about the amendment is to try to ensure that the monitoring is not only more regular but more effective. These are the points to which I want to address myself. The Government must immediately recognise that we have established a norm in these matters. The hon. Member for Newcastle upon Tyne, East (Mr. Thomas) will recall in each of the last three years—1975, 1976 and 1977—the Government coming to the House and asking for increases in borrowings which have been working, in effect, at a billion pounds a year. This, in a sense, has been gratuitous because it reflected the fact that the Government had failed in their own estimates and forecasts and that the Corporation's estimates and forecasts had been progressively inaccurate. Thus, the Government had to come back to the House sooner than expected.
I must say that when the Secretary of State made the proud claim that this time they were on target, I found it one of the most sweeping claims to fame that he has tried to put across lately, because the fact is that the borrowing requirements now put forward are at the rate of nearly half a billion a year, reflecting the cuts that are being made in the expenditure programme, and anyone cutting a billion pounds over the next two years could reasonably be expected to keep within the present ceilings.
But even having said that, the other basic question is, what is the great rush? Hon. Members seem to imply that there is a tremendous rush here. According to the figures given to us, the take-up of borrowing is just over £3 billion, which must mean that there is at least time until the autumn before the borrowing powers might be exceeded. Therefore we can look at the matter in a considered and measured a way. Indeed, on behalf of the Opposition, I say that I know that Ministers will recognise that we shall want to get down to a great deal of detail in Committee.
It would be churlish of me not to recognise that there has been a genuine attempt here to provide some additional information. Part of the burden of the argument of those who have been involved in the legislation in detail in the last two or three years has been that we wanted a prospectus when the proposals for increases in borrowings were brought before the House. With the addition of the letter "u", "The Prospects for Steel" has become a prospectus for steel.
I pay tribute to those who put the document together. It is a useful document although, as many hon. Members on each side have pointed out, there are several assumptions in it which will need to be tested carefully, and a number of claims as the pattern of investment about which many hon. Members will have reservations. We shall want to use it as a major working document as the Bill goes into Committee in, I trust, its amended form.
Having said that we appreciate the fact that we now have rather more information from British Steel, we then have to come squarely down to what information we have from the Government of the day. In effect, the answer to that lies in the way in which the Government have given us their answers to the Select Committee in the White Paper, Cmnd. 7188, to which I shall refer later. But again there is a vast panorama here—the result of over two years of study—and we shall need to look at it in much more detail in Committee.
With regard to the basic pattern of the proposal, it seems that the Bill does not guarantee any opportunity for the House to get into the guts of the matter in any real detail in much under two years. It

is at that moment that it would seem that the capital reconstruction is envisaged, if BSC achieves its anticipated targets. If it does not achieve them, that capital reconstruction may be put out further and further into outer space.
As my hon. Friend the Member for Kingston upon Thames (Mr. Lamont) said in opening, it is quite unreasonable to expect the House to be happy with the notion that all we can look forward to in the next two years is one and a half hours in which to discuss £1·5 billion of borrowing.
What can we learn from the past two years? The new dawn which has been promised by Ministers in each of the last three years has, sadly, not been realised. The losses have been made perfectly plain. I am pleased to see that the losses for the current year appear to be somewhat less than we had feared. The latest figure is £440 million, but Sir Charles Villiers has made it plain on a number of occasions in the last few days that he sees no prospect of real profitability in under five years.
One hon. Member referred during the debate to semantics. This is very important, for when we talk about breaking even at the end of the next financial year—in effect, in two years' time—and when we talk about viability and about profitability, we are talking in a much longer timescale.
A second lesson which has been learned over the last two years—one has to say it with some regret—concerns the way in which the Beswick review has been blowing hot and cold and has, in effect, been abandoned. Several plants which have been delayed have now been abandoned, and this has had an enormous impact, as we have heard from many hon. Members. We have to see this as the clear conclusion which is put before the House at the present time. The Opposition view is that this is a matter in regard to which we may need to have some degree of flexibility. I shall try to explain a little later how I view it.
The third clear understanding which has been achieved in the last two years is that, on demanning, it is totally common ground that everyone in the House understands that demanning is a vital and difficult task which has to be tackled if the BSC is to survive at all.
The problem in this country today is that we are talking about internationally competitive manufacturing industry working within the EEC. Unless we get this great industry of ours right, which is what all hon. Members want, it will not survive. Therefore, this is a key. The figures have been made plain to all concerned.
There was a row and a rumpus and the Secretary of State tried to brush the matter aside when I recently questioned him about Monty Finniston's view that 40,000 redundancies had been achieved over the first five years and that there were to be another 40,000 over seven years. But compared with the problem facing us today, that was not a particularly dramatic objective. I recognise that this is a difficult area and that the Government have an argument if they say that they want to move on a phased basis. We would be fooling ourselves and the country if we suggested that this is anything but a major task. As Sir Charles Villiers has made plain in his international comparisons, these are the sort of achievements which have to be reached if the industry is to survive.
Having said that those are the hard, critical decisions and the hard lessons that have been learned, we are saying that the House and the country have come to expect a progressive reduction in the losses made by the British Steel Corporation, in the number of smaller plants, in the numbers employed and in the total output of the Corporation. Sir Charles Villiers is talking of a 25 million tonne strategy and has described this as the end of the expansionist era. In that situation, what is the role to be played by the various partners in this framework? As regards the British Steel Corporation and the TUC steel committee, I welcome, on behalf of the Opposition, the greater sense of realism which we now have. It has been spelled out in "Prospects for Steel". It has also been made plain that the Government have had to face tough decisions, which cannot have been easy.
There have been delays, time lags and criticism from the all-party view on the Select Committee. We shall need to consider these matters as we proceed with the Committee stage of the Bill. The role of the Government and the House has to be related not only to what the British

Steel Corporation is doing but to what the Government themselves have done to meet the challenge. The so-called steel row over the Select Committee and so on tended to obscure many of the valuable recommendations put forward by the Select Committee which were of direct help to the industry and which could give greater assurance to the House and to the country that there were ways in which matters could be improved. The British Steel Corporation has moved in a number of ways to take a more realistic stance but it has still to justify many of the assumptions which it has put to us today.
On the question of the role of the Government and of the House, the Government have been lacking in meeting the detailed views which have come from Members on all sides and from the Select Committee. I welcome the fact that the Secretary of State, in a moderate speech, was seeking to be helpful. I recognise that we have had before us the White Paper and have had time to consider it and to consider "Prospects for Steel" and so on. This shows a recognition of the march of events. The House has reached a stage at which it has made abundantly plain that it is not willing to give its name to substantial underwriting of sums from within the public sector borrowing requirement without proper accountability by the Government to the House. Nevertheless, I pay tribute to the Government for reacting to the pressure that we have put upon them.
On the estimates, in the forecasts and in the technical and financial competence which the Government are, or should be, demonstrating on the vetting of this programme, we have many of our gravest reservations. In this area, the Government's track record for getting matters completely wrong or confused seems to be clearest. It is in this area that the House must try to judge not only BSC's problems but the problems of the way in which the Government relate to the nationalised industries.
We have had recently a White Paper from the Government. This, too, must be relevant to further proceedings on the Bill. Let us consider some of the Government responses to what the Select Committee said in its report—Cmnd. 7188. I should like to put to them some major questions to which I hope the Minister of State will try to bend his mind tonight.


There are a mass of matters to which we still need to return.
I turn to what I take to be the main lesson of the debate—the whole question of comparisons. I mean comparisons between large and small plants and between regions, plants or divisions that have better industrial relations than those in some other part of the country—in other words, the way in which each part of the Corporation can or cannot make its case for a fair share of the investment cake.
I immediately have to ask why the Government are so totally opposed to the notion of financial monitoring of individual projects. Why will they not look at rates of return within a particular project framework? Surely this is an obvious way of getting the small plant versus large plant argument in perspective, a way of assessing whether real progress is being made and a way of ensuring that a plant that is genuinely trying to improve and secure its future has some quantitative assessment as well as a qualitative assessment and is not lost within the overall results of a division or the overall loss of the Corporation.
I agree with those hon. Members who have pointed out that there are many successes. We have not heard about them from one side of the House only. We all want to take pleasure in seeing the successes, in South Yorkshire or wherever, that the country needs so badly.
Why do the Government not get to the heart of project assessment and return on capital of particular projects? In all the proceedings of the Select Committee and all the debates and arguments in recent years, the Government have fought shy of this approach. It would give us a fairer measure of what is going on at Port Talbot, Hunterstone, Llanwern and at Thrybergh or wherever.
If we could see a move in this direction, it would be an immediate way in which the provision of further public funds could be seen against a background of some sort of check or balance and the return on investment that taxpayers and hon. Members expect to see.
The 5 per cent. return on capital that is mentioned in the White Paper on the Government's relationship with nationalised industries is, we are told in the Government's latest reply to the Select Com-

mittee on Nationalised Industries, a matter to be considered in relation to the British Steel Corporation. I hope that the Minister will be able to tell us more about this matter.
I turn to the question how the Government can justify their failure to pay the Corporation for its non-commercial obligations. That is recommendation No. 23 in Command 7188. The Government have fallen back on the excuse that this matter raises difficulties in relation to the EEC and that they would be laying themselves open to the charge of subsidising the industry. But the whole EEC is busy subsidising its steel industry. In France, Belgium, even in Germany, there are forms of subsidy, whether through cheap loans or through the write-off of loans. There are many examples to show that if we have to give this sort of assistance to make clear that part of the Corporation that is operating commercially and that part, particularly on the Beswick argument, that is operating at the Government's behest, we shall never have a better opportunity than at the present time.
The last and most crucial question in relation to the Bill is why the financial reconstruction is being put off. Precisely the same arguments can apply. It has been implied that if the financial reconstruction took place now, we would have difficulty with the Americans or the EEC in reaching international agreement. I should be interested to know whether the Minister can confirm that this is the reason.
There has been a certain coyness in talking about the financial reconstruction that will be undertaken when the BSC breaks even in, we hope, two years' time. If the financial reconstruction is to be undertaken, the House should know about it as soon as possible.
The whole thrust of the argument is that the Minister of State must assure us that if we have a financial reconstruction involving the write-off of capital and/or debt, we must be clear that it will mean an automatic reduction in the borrowing limit, otherwise we shall be stuck with a harrowing limit which could go on for many years if we simply continued to write off debt against it. May we have that assurance? May we also have an assurance that no part of the additional borrowing covered in the Bill will be subject to a write-off, either as principal or


interest? In other words, out of the additional £1½ billion proposed under the Bill, will the Minister assure us that there will be no suggestion of write-off for these further sums?
We understand the argument about the traditional debts, but we want to be clear that the sums now being put forward are not themselves likely to be the subject of write-offs. If we are saying that, we immediately raise doubts whether these moneys are being properly and effectively used.
These are some of the basic questions with which we have all had to wrestle in trying to reach, perhaps in a series of shorthand notes, the way in which we would like to see the Bill given closer scrutiny. They are the sort of basic questions to which I hope we can have answers. Up to tonight's debate we have had two years of constant pressure by this House, the Select Committee on Nationalised Industries and the Press, radio and television for a more up-to-date and realistic view of what BSC was doing and what was happening in relation to it and the Government.
If there was one thing that came out of the Select Committee report it was quite simply that all was not well within the financial and managerial circles of BSC, on the one hand, and that all was not well with regard to the Government's ability effectively to monitor the BSC, on the other hand. One does not need to spell out the arguments all over again. But if one cannot persuade an all-party group of MPs, with no obvious axe to grind in reaching a decision and who bring forward criticisms of this kind, that all is not well on those two fronts, one certainly cannot convince the taxpayer that all is well.
It is this kind of background and worry which adds so much force to what we have put forward in our amendment. That is why I was mystified when the hon. Member for Rother Valley (Mr. Hardy) put the burden of his speech on the fact that on a notable occasion, which he and I well remember, he had been deprived of raising matters affecting the BSC. It is common ground among us all that this House should debate steel more regularly. I would have thought that the

amendment was a useful step in moving in that direction.
I well understand that in the more giddy atmosphere which is being created as we move inexorably towards a General Election even the hon. Gentleman will leave behind some of his more prudent manners and feel that he must pitch in with the rest of us. I also understand that in the light of events over the last few days many Labour Members may feel that it is no bad thing to be seen in bed altogether once more.

Mr. Lambie: We did not all go to English public schools.

Mr. Marshall: The hon. Gentleman rightly chastises me for moving down dangerous tracks and I shall return to safer ground.
Ministers may be cynical when they hear a certain word of understanding from this side of the House. But anyone grappling with the problems of BSC amid the vastly different and fast-moving panorama of internaional steel competition needs some sympathy. Very difficult judgments have to be reached, and I do not pretend that anyone in this House can pretend that he has it all right. But Ministers, who do bear a responsibility, must demonstrate that they are moving to meet the mood of the House and that they are moving away from the kind of blandness and conspiracy between the Corporation and themselves in an attempt to assure the House and the country that everything was all right.
The Secretary of State in some ways has become almost a figure in Greek tragedy. Time and again he has come forward on other matters with what many of us have taken to be the right answers, only to be shot down by his hon. Friends. In this matter, he is rather more suspect. We all recall that when the 10-year strategy was put forward, he had to argue that it should be doubled and that it was only half good enough. Today, however, he is presiding over the dismantling of at least half the current programme. I recognise that in his personal terms he is something of a figure in Greek tragedy. I am tempted to go on to say that we should start a "Save the Secretary of State from his friends club".
The Minister of State is perhaps harder to see in a role in Greek tragedy. However, I pay him tribute. Over the years that we have been debating these matters on borrowing, he has tried to provide a lot of information, and it is something of a tragedy in his personal terms that his provisional information was so clearly slammed as misleading the House. I do not want to re-open all the old sores on this. I say only this of him. I hope that, in the proceedings on this Bill, as we proceed we can look to him as the compulsive provider of information as of old. He has a certain elusive quality which will well protect him when we come to these arguments in the give-and-take proceedings in Committee. He is perhaps more a figure from "Where's Charley?" with his famous Tory knock-about routine which I hope he will put aside tonight because he has some very serious questions to answer before this Bill receives a Second Reading.
I have tried to touch on a number of the key issues, and many of them have been implied by the matters that hon. Members have raised. I confess that one of the lessons of this debate for me has been the way in which the case for greater flexibility and for the smaller plant has been put forward so eloquently. The figures are telling. At present, there are some 33 arc furnaces in 13 plants up and down the country which are making money. Sadly, the situation is not the same in the so-called steel cathedrals in other parts of the country. In that situation, we should not simply set our sights on some neat and tidy package and assume that everything that has been told us by the Secretary of State is the best of all possible answers. We are in a situation where we would like to see the matter reviewed on a regular basis.
I join my hon. Friend the Member for New Forest (Mr. McNair-Wilson) in a slight feeling of optimism about the world scene. There are some signs that steel demand is beginning to move ahead again. But, having said that, I also want to echo those who feel that the game has become much more difficult and that every time the British Steel Corporation sells the know-how for a plant in, say, Iran we must recognise that we are building up major competitors for ourselves

who in the long term will be very tough to fight.
We cannot be happy about the situation which has developed over the last year or so in which the steel row is one which has brought this House and many of its right hon. and hon. Members to a state where their relationship with the Corporation has not been as happy as many of us would wish. I say that as one who spent most of his working life in the industry before coming here. I have many friends who still work in the industry. Those of us who are interested in these matters sometimes find it a little hard to persuade ourselves that we should tell people working in those steelworks up and down the country that we know better than they do. A certain natural modesty in these matters goes a long way.
Having said that, the responsibility has been forced upon us more and more by the problems of the Corporation and more and more by the failure of the Government to take us fully into their confidence. When we reach a situation where the Corporation is losing £900 million over a three-year period, on present estimates, we would be failing in our duty if we did not call for regular scrutiny and for the kind of critical appraisal that we feel it is necessary to undertake.
It is in this sense that Parliament is truly the taxpayers' representative. But, equally, my disquiet stretches to the thoughts of those who are losing jobs and who are being made redundant. Those of us who worked in years past in places such as Consett, Shelton and all these famous names think it tragic when those famous names disappear from the international steel scene. It is a tragedy for the industry. It is a tragedy for those who had hoped to spend their lives in the industry and no doubt wished their children to do the same.
Above all, what we are all seeking to do is to preserve the maximum number of jobs for the longest period to build up a vigorous and profitable British Steel Corporation. It will not be achieved without the right balance, which will not be achieved unless the House takes a regular and detailed view. That is why I urge my hon. Friends to press the amendment to a Division.

9.40 p.m.

The Minister of State, Department of Industry (Mr. Gerald Kaufman): No debate on any industry can have taken place against a background of so much recently published information about that industry. Hon. Members preparing for the debate have been able to study three Select Committee reports and two White Papers, and the specially prepared BSC booklet "Prospects for Steel". I am glad that hon. Members have paid tribute to the Corporation for providing that booklet.
The difficulties of the Corporation, as seen in all the material that we have studied for this debate, are clear. While fighting a world steel slump unparalleled in recent industrial history. the Corporation has been carrying through the largest development programme in the EEC. It had hoped to pay for half of it out of revenue, but the slump in sales and prices has brought losses instead of profits.
At the same time, the Corporation has had to tackle the long-standing problem of low productivity. It has reassessed the market and is now convinced that it must deal with its capacity requirements on a step-by-step basis. This has meant bringing forward planned closures, all of which were foreshadowed in the 1973 White Paper. It has also meant deferring major projects which expand capacity. Even so—hon. Members on the Government Benches have paid tribute to this—investment over the next two years is likely to be £1 billion.
In dealing with these gigantic problems, the Corporation has had to take account of three major considerations. First, it must return to profit. Second, as my hon. Friends the Members for Consett (Mr. Watkins), Motherwell and Wishaw (Dr. Bray) and Newport (Mr. Hughes) said, the Corporation must take into account the social consequences of its actions. Third, the Corporation must maintain a viable steel industry capable of supplying a major industrial nation. Here, I certainly agree with the hon. Member for New Forest (Mr. McNair-Wilson) rather than with his hon. Friend the Member for Flint, West (Sir A. Meyer).
It is extraordinarily difficult, of course, to satisfy those three objects simultaneously. To seek to move into profit

immediately would mean mass closures and redundancies of a kind that would devastate steel communities. It would also mean taking a hatchet to the industry so brutally that we should be dependent on imports to an unacceptable degree. I cannot understand why some hon. Members are so sanguine about British industry being a prisoner of imports from foreign steel manufacturers.
At the same time, however, it is out of the question to maintain plans for new capacity which would leave the country with massive over-capacity for some years, even on optimistic assmuptions about demand and exports in an economic upturn.
My hon. Friend the Member for Stoke-on-Trent, Central (Mr. Cant) asked about electric arc furnaces. Of course we already have a bigger proportion of this capacity than any other country in the EEC, except Italy. In terms of particular electric arc furnaces, I refer my hon. Friend to paragraph 12 of the White Paper "British Steel Corporation: the Road to Viability". There, we say quite clearly that
the BSC has proposed and the Government has agreed … the construction of electric arc plants at Shelton, Hunterston and Ravenscraig should be deferred until demand forecasts improve sufficiently to justify their construction.
My hon. Friend the Member for Stoke-on-Trent, Central asked me two other important questions. Rather than answer them off the cuff, I shall study them with the care that they deserve and write to him, so that I can give him considered replies.
The Corporation has decided, taking all considerations into account, to aim at breaking even by the end of the next financial year. It has also realised, more keenly that never before, that it needs the full co-operation of the steel trade unions if it is to succeed. In their recent pay settlements the unions have accepted the need to co-operate in rationalisation and to raise the present unsatisfactory productivity levels towards those of our European competitors. As my hon. Friends the Members for Rotherham (Mr. Crowther), Sheffield, Hillsborough (Mr. Flannery) and many others have said, it can be done. In some of our plants productivity levels stand up well against most international comparisons.
The Tory Opposition are perfectly well aware of the actions that the Corporation and the unions are taking to get the business back into profit. Indeed, in their amendment they welcome the steps that are being taken. At first it is difficult to understand why they have decided to vote against the Bill. After all, that is what their amendment means. We can immediately dismiss the reason given in their amendment. To claim that Parliament does not have adequate opportunity to assess the progress of the Corporation is absurd. The Select Committee on Nationalised Industries has demonstrated just how determined it can be in investigating the Corporation's progress. The House itself is able to debate the steel industry if it so wishes. We did so two months ago on an Opposition Supply Day.
I am not sure what purpose the Opposition believe such debates serve if today is anything to go by. Only a handful of Opposition Members have been present at any one time. However, in 13 minutes they will be flocking back to vote in favour of insisting on debates that hardly any of them have the slightest intention of attending.
Under the Bill there will have to be a debate if the second tranche of the borrowing limit is needed. The Opposition may say that there will be a debate only it the borrowing limit needs to be raised. and that that may not be for some time. However, the longer that the Corporation can go without an increase in its borrowing limit the more clearly it will be seen to be coming into control of its finances.
As the hon. Member for Come Valley (Mr. Wainwright) said, the level of the borrowing limit will have to be reviewed at the time of the capital reconstruction. I give him that assurance, which is the one for which he asked. The extent of any change that is proposed to the borrowing limit will have to depend on the nature and timing of the reconstruction. We do not yet know what that will be and when.
The reason given in the Tory amendment is transparently implausible. The Tory Party's 1970 election manifesto proclaimed:
We will progressively reduce the involvement of the State in the nationalised industies,

for example in the steel industry, so as to improve their competitiveness".
That was its policy, but what it is now seeking to do is to damage the competitiveness of the Corporation by making it subsist on a dripfeed diet. That is no way to run a great business.
The Corporation has massive problems and, as the hop. Member for Colne Valley said, the last thing that we want to do is to add a further measure of uncertainty on the question whether genuine financing needs can be met. How can the Corporation begin to plan its employment and investment strategies on such a basis?
Tory Members are pretty free with suggestions on how the Corporation should spend its money. In the middle of the crisis last November, when its full extent was known and the previous year's financial loss was expected to be £500 million or, according to the Second Select Committee's report, even £600 million, the hon. Member for Mid-Sussex (Mr. Renton) was insisting that the full Port Talbot development should go ahead at a cost of at least £850 million, together with Redcar, which would have added another £250 million
The hon. Member for Wirral (Mr. Hunt) wrote to my right hon. Friend the Secretary of State with a further suggestion:
I strongly support the proposal for investment in three tandem furnaces at Shotton.
The hon. Member for Flint, West wrote to my right hon. Friend on the same day with the same request. He declared that the outlay involved was
the relatively small cost of £25 million.
Today he described that £25 million as "surprisingly small". Yet in 10 minutes he will be voting against the Bill which will provide finance for the Corporation, including its investment projects. The hon. Gentleman wants £25 million spent. I grant him that £25 million is a surprisingly small sum compared with the demands of the Tory spokesman for Scot-and, the hon. Member for Gasgow, Cathcart (Mr. Taylor). [HON. MEMBERS: "Where is he?"] We have not seen him today, just as we have not seen any other Tory Members from Scottish constituencies.
The hon. Member for Cathcart came to see me in February, with two of his


colleagues. He told me that he was very worried that, as he described it, Scotland's 15 per cent. share of steel capacity might be reduced. Today, when he could have expressed that worry, he has been absent. If he were present, he would be voting against the money to provide the Scottish 15 per cent. share of steel capacity.

Mr. Tim Renton: Will the hon. Gentleman give way?

Mr. Kaufman: Not to the hon. Gentleman. He should have taken his opportunity when I referred to him. I have now referred to his hon. Friend the Member for Cathcart. That 15 per cent. share involves spending large sums of money. But I was able to point out to the hon. Member for Cathcart when he came to see me that in the previous financial year 21 per cent. of the British Steel Corporation's investment went to Scotland. The BSC's document "Prospects for Steel" makes clear that Scotland can expect a steady 15 per cent. of capital expenditure from 1978 to 1980.
The Tories demand the expenditure of vast sums on particular projects in particular areas. But tonight they will vote to cut off the money completely. [HON. MEMBERS: "No".] That is what their amendment means. They decline to give a Second Reading to the Bill.
The fact is that the Tories have a vendetta against the British Steel Corporation. They also have a vendetta against its workers. They show that by their constant demand for an annual target of redundancies each year for the next five years regardless of market needs and productivity objectives.
On 22nd March the right hon. Member for Leeds, North-East (Sir K. Joseph) demanded
an agreed and specified programme of demanning."—[Official Report, 22nd March 1978; Vol. 946, c. 1515.]
In the debate on 9th March the right hon. Gentleman gave the game away completely when he declared:
We believe that there should be no further capital without a specified rate of demanning".—[Official Report, 9th March 1978; Vol. 945, c. 1635.]
Some prejudiced observers, including my hon. Friend the Member for Rotherham—

Sir Keith Joseph: Will the Minister of State acknowledge that I was specifically quoting the recommendations of the Select Committee on both subjects?

Mr. Kaufman: Yes, I will. But the House voted by a majority of 48 not to approve those recommendations.
Some observers, including my hon. Friend the Member for Rotherham, claim that the Tories have no industrial policy. My hon. Friend and others are wrong. In the past four years the Tories have increasingly demonstrated what their industrial policy is. Their industrial policy is "No". No jobs. When the House is asked to vote money for employment projects, the Tories vote "No" by reflex. They voted "No" to financial assistance for industry orders in 1975, 1976 and 1977. We shall have another order shortly and no doubt they will vote against that.
They vote "No" to British Leyland. They have been doing that since 1975, and they did it most recently last month. They vote "No" to money for Chrysler. They vote "No" to State investment in the motor industry as a whole. The continuation of that approach would scupper motor industry projects not only in assisted areas but in the whole country. They vote "No" to money for Norton Villiers Triumph.
Opposition Members are cheering. But that involves jobs in the West Midlands. Hon. Members have been demanding that we do something about the problems of the West Midlands, but when I remind them that they have voted against jobs in the West Midlands they cheer.

Mr. Norman Lamont: Will the Minister of State confirm that the British Steel Corporation now has £1,000 million, which will last it for one year? Will he also confirm that I specifically said, when opening the debate, that we accept that the Corporation needs more money. We said that it should not be advanced for three years. We deplore the Minister's attitude, which seems to be "Fork up and do not ask any questions".

Mr. Kaufman: If the Opposition amendment is carried the Bill will fall and that money will not be available.
The Conservatives voted "No" to money for Herbert Machine Tools. They


even voted "No" to money for the Lindsey oil refinery, in which 1,500 jobs were involved. No matter how small the number of jobs involved, they vote "No". They voted "No" to the Polish shipbuilding deal, with 37,000 involved lobs. Without that deal workers all over Scotland and in other shipbuilding industry areas would be out of work today.
Now, tonight, they are to vote "No" to finance for the British Steel Corporation.

Mr. Stan Crowther: I hope that my hon. Friend does not wish to misquote me. I did not say that the Conservatives had no policy on steel. Their policy is to shut most of the industry down.

Mr. Kaufman: I apologise to my hon. Friend. As occurs so often, he is right and I am wrong. If the Conservatives succeeded in their objective tonight they would close down the British Steel Corporation.
I have been doing some sums. I reckon that at 10 o'clock tonight, in three minutes' time, when the Opposition divide the House against the Bill, the grand total of workers whose livelihood the Tories will have voted to destroy in this Parliament will be 1½ million, at least.
That is without taking into account the other jobs that have been provided

by the accelerated projects scheme, the selective assistance scheme and all the Government schemes which one cannot quantify in that way. The Conservatives are also voting against jobs in small businesses. The investment programme of the BSC goes through the metallurgical plant manufacturers, who beg the Government for billions of pounds of investment in the Corporation, down to small firms who also provide for the British Steel Corporation.

This week on the Finance Bill, and again tonight, we have been shown more than ever before the true face of Toryism and the contrast between attitudes. The Opposition's attitude can be summed up clearly. It is tax cuts for the well off and job cuts for the rest. That is what their policy amounts to. That is what their votes amount to. Whatever they say about their intentions, their votes are the test. Their votes are what would throw workers in Leyland out of work and what would throw nearly 200,000 workers at the British Steel Corporation out of work. I call on the House to give the Bill a Second Reading and secure a future for a modern, competitive and profitable steel industry.

Question put, That the amendment be made:—

The House divided: Ayes 203, Noes 252.

Division No. 207]
AYES
[10.00 p.m.


Adley, Robert
Carlisle, Mark
Fry, Peter


Aitken, Jonathan
Chalker, Mrs Lynda
Gardiner, George (Reigate)


Alison, Michael
Channon, Paul
Gardner, Edward (S Fylde)


Amery, Rt Hon Julian
Churchill, W. S.
Glyn, Dr Alan


Arnold, Tom
Clark, Alan (Plymouth, Sutton)
Godber, Rt Hon Joseph


Atkins, Rt Hon H. (Spelthorne)
Clark, William (Croydon S)
Goodhart, Philip


Atkinson, David (Bournemouth, East)
Clarke, Kenneth (Rushcliffe)
Goodhew, Victor


Awdry, Daniel
Clegg, Walter
Goodlad, Alastair


Baker, Kenneth
Cookcroft, John
Gorst, John


Banks, Robert
Cooke, Robert (Bristol W)
Gow, Ian (Eastbourne)


Bendall, Vivian (Ilford North)
Cope, John
Grant, Anthony (Harrow C)


Bennett, Sir Frederic (Torbay)
Cormack, Patrick
Griffiths, Eldon


Bennett, Dr Reginald (Fareham)
Costain, A. P.
Grist, Ian


Benyon, W.
Critchley, Julian
Grylls, Michael


Berry, Hon Anthony
Crouch, David
Hall-Davis, A. G. F.


Biffen, John
Crowder F. P.
Hamilton, Archibald (Epsom &amp; Ewell)


Biggs-Davison, John
Dodsworth, Geoffrey
Hamilton, Michael (Salisbury)


Blaker, Peter
Drayson, Burnaby
Hampson, Dr Keith


Body, Richard
du Cann, Rt Hon Edward
Hannam, John


Boscawen, Hon Robert
Durant, Tony
Haselhurst, Alan


Bottomley, Peter
Dykes, Hugh
Hastings, Stephen


Bowden, A. (Brighton, Kemptown)
Eden, Rt Hon Sir John
Hawkins, Paul


Boyson, Dr Rhodes (Brent)
Emery, Peter
Hayhoe, Barney


Braine, Sir Bernard
Eyre, Reginald
Hicks, Robert


Brocklebank-Fowler, C.
Farr, John
Higgins, Terence L.


Brooke, Peter
Finsberg, Geoffrey
Hodgson, Robin


Brotherton, Michael
Fisher, Sir Nigel
Holland, Philip


Bryan, Sir Paul
Fookes, Miss Janet
Hordern, Peter


Buck, Antony
Forman, Nigel
Howell, David (Guildford)


Budgen, Nick
Fowler, Norman (Sutton C'f'd)
Hunt, John (Ravensbourne)


Bulmer, Esmond
Fox, Marcus
Hurd, Douglas


Butler, Adam (Bosworth)
Fraser, Rt Hon H. (Stafford &amp; st)
James, David




Jenkin, Rt Hon P. (Wanst'd &amp; W'df d)
Morrison, Charles (Devizes)
Sinclair, Sir George


Jessel, Toby
Morrison, Hon Peter (Chester)
Skeet, T. H. H.


Johnson Smith, G. (E Grinstead)
Mudd, David
Smith, Dudley (Warwick)


Joseph, Rt Hon Sir Keith
Neave, Airey
Smith, Timothy John (Ashfield)


Kershaw, Anthony
Nelson, Anthony
Speed, Keith


Kimball, Marcus
Neubert, Michael
Spence, John


King, Evelyn (South Dorset)
Newton, Tony
Sproat, Iain


Knight, Mrs Jill
Nott, John
Stainton, Keith


Knox, David
Onslow, Cranley
Stanbrook, Ivor


Lamont, Norman
Oppenheim, Mrs Sally
Steen, Anthony (Wavertree)


Langford-Holt, Sir John
Page, John (Harrow West)
Stewart, Ian (Hitchin)


Lawrence, Ivan
Page, Rt Hon R. Graham (Crosby)
Stokes, John


Lawson, Nigel
Parkinson, Cecil
Stradling Thomas, J.


Le Marchant, Spencer
Pattie, Geoffrey
Tapsell, Peter


Lewis, Kenneth (Rutland)
Percival, Ian
Tebbit, Norman


Lloyd, Ian
Pink, R. Bonner
Temple-Morris, Peter


Luce, Richard
Powell, Rt Hon J. Enoch
Thomas, Rt Hon P. (Hendon S)


McCrindle, Robert
Price, David (Eastleigh)
Townsend, Cyril D.


Macfarlane, Neil
Prior, Rt Hon James
Trotter, Neville


MacKay, Andrew (Stechford)
Raison, Timothy
van Straubenzee, W. R.


McNair-Wilson, P. (New Forest)
Rathbone, Tim
Vaughan, Dr Gerard


Madel, David
Rees, Peter (Dover &amp; Deal)
Viggers, Peter


Marshall, Michael (Arundel)
Renton, Rt Hon Sir D. (Hunts)
Walder, David (Clitheroe)


Marten, Neil
Renton, Tim (Mid-Sussex)
Wall, Patrick


Mates, Michael
Rhodes, James R.
Walters, Dennis


Mather, Carol
Ridley, Hon Nicholas
Warren, Kenneth


Mawby, Ray
Ridsdale, Julian
Weatherill, Bernard


Maxwell-Hyslop, Robin
Roberts, Wyn (Conway)
Wells, John


Mayhew, Patrick
Rodgers, Sir John (Sevenoaks)
Whitney, Raymond (Wycombe)


Meyer, Sir Anthony
Rossi, Hugh (Hornsey)
Wiggin, Jerry


Miller, Hal (Bromsgrove)
Rost, Peter (SE Derbyshire)
Winterton, Nicholas


Mills, Peter
Sainsbury, Tim
Wood, Rt Hon Richard


Mitchell, David (Basingstoke)
Shaw, Giles (Pudsey)
Young, Sir G. (Ealing, Acton)


Moate, Roger
Shelton, William (Streatham)



Molyneaux, James
Shepherd, Colin
TELLERS FOR THE AYES:


Morgan-Giles, Rear-Admiral
Shersby, Michael
Mr. Jim Lester and


Morris, Michael (Northampton S)
Sims, Roger
Mr. John MacGregor.




NOES


Abse, Leo
Crawshaw, Richard
Graham, Ted


Allaun, Frank
Crowther, Stan (Rotherham)
Grant, George (Morpeth)


Anderson, Donald
Cryer, Bob
Grocott, Bruce


Archer, Rt Hon Peter
Davidson, Arthur
Hamilton, James (Bothwell)


Ashton, Joe
Davies, Bryan (Enfield N)
Hamilton, W. W. (Central Fife)


Atkinson, Norman
Davies, Rt Hon Denzil
Hardy, Peter


Bagier, Gordon A. T.
Davies, Ifor (Gower)
Harper, Joseph


Bain, Mrs Margaret
Davis, Clinton (Hackney C)
Harrison, Rt Hon Walter


Barnett, Guy (Greenwich)
Deakins, Eric
Hart, Rt Hon Judith


Barnett, Rt Hon Joel (Heywood)
Dean, Joseph (Leeds West)
Hattersley, Rt Hon Roy


Bates, Alf
Dell, Rt Hon Edmund
Hayman, Mrs Helene


Bean, R. E.
Dempsey, James
Healey, Rt Hon Denis


Beith, A. J.
Dewar, Donald
Heffer, Eric S.


Benn, Rt Hon Anthony Wedgwood
Doig, Peter
Henderson, Douglas


Bennett, Andrew (Stockport N)
Dormand, J. D.
Hooley, Frank


Bidwell, Sydney
Douglas-Mann, Bruce
Horam, John


Bishop, Rt Hon Edward
Duffy, A. E. P.
Howell, Rt Hon Denis (B'ham, Sm H)


Blenkinsop, Arthur
Dunnett, Jack
Huckfield, Les


Boardman, H.
Eadie, Alex
Hughes, Robert (Aberdeen N)


Booth, Rt Hon Albert
Edge, Geoff
Hughes, Roy (Newport)


Boothroyd, Miss Betty
Ellis, John (Brigg &amp; Scun)
Hunter, Adam


Bottomley, Rt Hon Arthur
Ennals, Rt Hon David
Irvine, Rt Hon Sir A. (Edge Hill)


Boyden, James (Bish Auck)
Evans, Fred (Caerphilly)
Irving, Rt Hon S. (Dartford)


Bradley, Tom
Evans, Ioan (Aberdare)
Jackson, Colin (Brighouse)


Bray, Dr Jeremy
Evans, John (Newton)
Jackson, Miss Margaret (Lincoln)


Brown, Hugh D. Provan)
Ewing, Harry (Stirling)
Janner, Greville


Brown, Robert C. (Newcastle W)
Faulds, Andrew
Jenkins, Hugh (Putney)


Buchan, Norman
Fernyhough, Rt Hon E.
Johnson, James (Hull West)


Butler, Mrs Joyce (Wood Green)
Flannery, Martin
Jones, Alec (Rhondda)


Callaghan, Jim (Middleton &amp; P)
Fletcher, L. R. (Ilkeston)
Jones, Barry (East Flint)


Canavan, Dennis
Fletcher, Ted (Darlington)
Jones, Dan (Burnley)


Carmichael, Neil
Foot, Rt Hon Michael
Kaufman, Gerald


Carter, Ray
Forrester, John
Kerr, Russell


Carter-Jones, Lewis
Fowler, Gerald (The Wrekin)
Kilroy-Silk, Robert


Cartwright, John
Fraser, John (Lambeth, N'w'd)
Kinnock, Neil


Clemitson, Ivor
Freeson, Rt Hon Reginald
Lambie, David


Cocks, Rt Hon Michael (Bristol S)
Freud, Clement
Lamborn, Harry


Colquhoun, Ms Maureen
Garrett, John (Norwich S)
Lamond, James


Conlan, Bernard
Garrett, w. E. (Wallsend)
Latham, Arthur (Paddington)


Cook, Robin F. (Edin C)
George, Bruce
Leadbitter, Ted


Corbett, Robin
Gilbert, Rt Hon Dr John
Lee, John


Cowans, Harry
Ginsburg, David
Lestor, Miss Joan (Eton &amp; Slough)


Cox, Thomas (Tooting)
Golding, John
Lever, Rt Hon Harold


Craigen, Jim (Maryhill)
Gould, Bryan
Lewis, Arthur (Newham N)


Crawford, Douglas
Gourlay, Harry
Litterick, Tom







Loyden, Eddie
Pendry, Tom
Taylor, Mrs Ann (Bolton W)


Luard, Evan
Penhaligon, David
Thomas, Dafydd (Merioneth)


McCartney, Hugh
Phipps, Dr Colin
Thomas, Jeffrey (Abertillery)


McDonald, Dr Oonagh
Price, C. (Lewisham W)
Thomas, Mike (Newcastle E)


McElhone, Frank
Price, William (Rugby)
Thomas, Ron (Bristol NW)


MacFarquhar, Roderick
Reid, George
Thorne, Stan (Preston S)


McGuire, Michael (Ince)
Richardson, Miss Jo
Tilley, John (Lambeth, Central)


MacKenzie, Rt Hon Gregor
Roberts, Albert (Normanton)
Tomlinson, John


Maclennan, Robert
Roberts, Gwilym (Cannock)
Torney, Tom


McMillan, Tom (Glasgow C)
Robinson, Geoffrey
Urwin, T. W.


McNamara, Kevin
Roderick, Caerwyn
Varley, Rt Hon Eric G.


Madden, Max
Rodgers, George (Chorley)
Wainwright, Edwin (Dearne V)


Magee, Bryan
Rodgers, Rt Hon William (Stockton)
Wainwright, Richard (Colne V)


Marshall, Dr Edmund (Goole)
Rooker, J. W.
Walker, Harold (Doncaster)


Marshall, Jim (Leicester S)
Roper, John
Walker, Terry (Kingswood)


Meacher, Michael
Rose, Paul B.
Ward, Michael


Mellish, Rt Hon Robert
Ross, Stephen (Isle of Wight)
Watkins, David


Mendelson, John
Ross, Rt Hon W. (Kilmarnock)
Watkinson, John


Mikardo, Ian
Rowlands, Ted
Watr, Hamish


Millan, Rt Hon Bruce
Ryman, John
Weitzman, David


Miller, Dr M. S. (E Kilbride)
Sandelson, Neville
Wellbeloved, James


Mitchell, Austin
Sedgemore, Brian
White, Frank R. (Bury)


Molloy, William
Sever, John
White, James (Pollock)


Moonman, Eric
Shaw, Arnold (Ilford South)
Whitehead, Philip


Morris, Rt Hon J. (Aberavon)
Sheldon, Rt Hon Robert
Whitlock, William


Moyle, Roland
Shore, Rt Hon Peter
Willams, Rt Hon Alan (Swansea W)


Murray, Rt Hon Ronald King
Short, Mrs Renée (Wolv NE)
Williams, Alan Lee (Hornch'ch)


Newens, Stanley
Silkin, Rt Hon S. C. (Dulwich)
Williams, Rt Hon Shirley (Hertford)


Noble, Mike
Silverman, Julius
Williams, Sir Thomas (Warrington)


Ogden, Eric
Skinner, Dennis
Wilson, Gordon (Dundee E)


O'Halloran, Michael
Smith, John (N Lanarkshire)
Wilson, William (Coventry SE)


Orbach, Maurice
Snape, Peter
Wise, Mrs Audrey


Orme, Rt Hon Stanley
Spearing, Nigel
Woodall, Alec


Ovenden, John
Stallard, A. W.
Woof, Robert


Owen, Rt Hon Dr David
Steel, Rt Hon David
Wrigglesworth, Ian


Padley, Walter
Stewart, Rt Hon Donald
Young, David (Bolton E)


Palmer, Arthur
Stewart, Rt Hon M. (Fulham)



Park, George
Stoddart, David
TELLERS FOR THE NOES:


Parker, John
Summerskill, Hon Dr Shirley
Mr. James Tinn and


Parry, Robert
Swain, Thomas
Mr. Donald Coleman.


Pavitt, Laurie

Question accordingly negatived.

Main Question put forthwith pursuant to Standing Order No. 39 (Amendment on second or third reading), and agreed to.

Bill accordingly read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

Orders of the Day — BUSINESS OF THE HOUSE

Ordered,
That, at this day's sitting, the Co-operative Development Agency Bill may be proceeded with, though opposed, until any hour.—[Mr. Harper.]

Orders of the Day — IRON AND STEEL (AMENDMENT) [MONEY]

Queen's Recommendation having been signified—

Resolved,
That it is expedient to authorise all such increased payments—

(a) out of the National Loans Fund, the Consolidated Fund and moneys provided by Parliament, and
(b) into the National Loans Fund and the Consolidated Fund,

as may result from any Act of the present Session increasing to £4,750 million, or such greater sum not exceeding £5,500 million as the Secretary of State may by order specify, the sum specified in section 19 of the Iron and Steel Act 1975 as the aggregate of the amount which the British Steel Corporation and the publicly-owned companies may borrow and the amount which the Secretary of State may under section 18 of the Act of 1975 pay to the Corporation.—[Mr. Harper.]

Orders of the Day — CO-OPERATIVE DEVELOPMENT BILL

Not amended (in the Standing Committee), considered.

New Clause No. 1

INTERPRETATION

'In this Act—
co-operative principles" means the principles in Schedule (Co-operative Principles) to this Act;
co-operative" means a body whose memorandum or articles of association or rules incorporate the principles in that Schedule;
on a co-oprative basis" means on the basis of the principles in that Schedule'.—[Richard Wainwright.]

Brought up, and read the First time.

Mr. Richard Wainwright: I beg to move, That the clause be read a Second time.
The purpose of this new clause and the associated schedule which is the subject of Amendment No. 23, which I understand we are also discussing is to draw attention to the fact, in the hope that the Government will move to act in this matter in another place, that this is a Bill that seeks to establish the completely new concept of a Co-operative Development Agency, without any definition whatever of what is a co-operative and what are the co-operative principles, which are referred to several times in the Bill.
The Government's omission in this respect is understandable, because Labour Members are, so to speak, insiders to co-operatives and to them it is as plain as a pikestaff what is meant by the term. If this were a domestic Labour Party affair, I should not dare to intrude, but we are here establishing a public agency, and the members of the public will be interested to know whether a project which they have in mind or on which they are working is relevant to the Agency's powers, whether they are wasting their time in approaching the Agency or whether they have a good case for assistance from it.
In this respect it is important that members of the public who have not been brought up in the atmosphere of Rochdale and the co-ops shall know what this public body is all about. To an ordinary

citizen who has not had the advantage of baptism in a particular movement the word "co-operative" is simply a normal term of everyday life. We all have to co-operate in order to get through our day's life at all.
Furthermore, in the report of the working party which gave birth to the Bill, in both the majority report and the minority report, members of the working party set up by the Government felt it necessary to set out what they meant by co-operative principles. The schedule associated with the new clause is taken word for word from the working party's deliberations. So it is in no sense a Liberal invention. It comes from people who inspired the Bill.
I submit—I shall say no more, because I hope that something will be done in another place—that it would be a manifest nonsense to try to establish a new public agency without any definition at all of the principles on which it is supposed to work.

The Under-Secretary of State for Industry (Mr. Bob Cryer): The clause was debated extensively in Committee, and I should like briefly to reiterate some of the points made there. First, under the Bill the Co-operative Development Agency has a legal obligation to review the law on co-operative organisations. I explained in Committee that we felt that it would be mistaken at this time, when we are setting up a body to look at the whole range of law regarding co-operatives, to saddle it with a definition.
The other point I made then was that the definition lacked a number of legal applications, and certainly they might well cause embarrassment. For example, paragraph 5 of the schedule says:
All co-operative societies should make provision for the education of their members, officers, and employees, and of the general public, in the principles and techniques of co-operation, both economic and democratic.
I pointed out in Committee that that might well be difficult to define and might well mean that every co-operative or potential co-operative to be helped by the CDA should undertake this obligation.
I recall the hon. Member for Colne Valley (Mr. Wainwright) suggesting that we should welcome an obligation to educate and inform people about co-operative principles. So we do,


emphatically, but there is a difference between taking a view that that is a very good thing to do and making it a legal obligation in an Act of Parliament, because there then arises the question of definition of whether an organisation has fulfilled its obligations to educate the general public in co-operative principles. Although we should like it to do it, we feel that the application of a legal definition would of necessity pose difficulties.
Therefore, we say that the CDA should be given a certain amount of flexibility. We expect it to undertake its legal obligation, which is to look at the whole range of law regarding co-operatives. If at the end of its examination it believes that a definition is necessary and should be incorporated into one or more statutes, I am convinced that it will return to the House with recommendations on which the Government and then the House can make a decision.
But, as we are starting on the Bill, and as we are starting on something new—a national agency for the promotion and development of co-operatives—we should not embark on difficulties of definition. I entirely accept that the definitions are universally understood as an expression of co-operative principles. But what is understood by co-operators and members of the general public is not always acceptable when one is applying the law. That is the difficulty that we face.
We want by all means to see co-operators and the general public gain education, but we believe that in this instance it would be better to leave the matter to the good sense and common sense of the CDA. If it feels that there is a gap here that needs filling, it has a legal obligation to come back and let us know.
Therefore, I suggest to the hon. Gentleman that in the light of my comments now and of the comments that I made previously in Committee, which he well understood, he should follow the example he so kindly undertook in Committee and withdraw New Clause No. 1.

Mr. Laurie Pavitt: As in Committee, I would point out to the hon. Member for Colne Valley (Mr. Wainwright) the background to the law as it has been for decades—the Industrial Provident Society Act which covers most

of the points that the hon. Gentleman is making. For the three major federations—that is, the Co-operative Union for the consumers—the provident rules go back 95 years. Co-operative housing has a similar kind of federal concept. Again, in agricultural co-operation most of the points that the hon. Gentleman has made are already there.

Mr. Richard Wainright: I cannot pretend that I am yet convinced by the Government's argument. I am sorry to have to predict that in my view there is almost bound to be a series of rows between the new Agency, which I continue to wish well, and disappointed applicants who will firmly believe that they fulfil the unspecified definitions of a co-operative but are rejected by the Agency on the ground that they do not. I hope that in the rather more leisured and contemplative atmosphere of another place, it will be possible to return to this point. I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

Clause 1

THE CO-OPERATIVE DEVELOPMENT AGENCY

Mr. Richard Wainwright: I beg to move Amendment No. 1, in page 1, line 7, at end insert
'for a period of five years from the formation of the Agency'.
The purpose of this amendment is to give the agency a clear but definite period of five years in which either to establish itself so well that co-operatives and the co-operative movement will be able to take it over and assume responsibility for it, or to have shown that it is really redundant and instead of leading a sort of half-life simply as a vehicle for Government patronage it should decorously expire.
As my right hon. Friend the Member for Orkney and Shetland (Mr. Grimond) said on Second Reading, we believe that if the Agency is to succeed in the long term it should become an agency run by co-operatives and by the various branches of the co-operative movement and should not have any kind of permanent life as a drain on public funds. It seems to us important to be fair to the Agency and tell it from the start that it has five years


in which to show that there is an important task to be accomplished and to get properly integrated with co-operatives. If it cannot do that within five years, we believe that it will have failed and that it would be better for it to be decently buried.

Mr. Kenneth Clarke: The Secretary of State will recall that in Committee the Conservative Party supported this amendment. It is one with which we continue to have a great deal of sympathy. We have throughout supported the Bill and the aims and objectives of the Agency as set out, with the very limited powers that it is given. But we have some hesitation about the whole idea of creating yet another quasi-public body of this kind—QUANGO is the fashionable word to use for them—and we think that the House and the Government generally tend to produce far too many such institutions.
Fortunately, this Agency is modestly conceived. We hope that it will remain small and merely advisory, that it will continue to have a very modest budget, that, as the Bill contemplates, it will be self-financing within three to five years and, if it has any useful purpose then to fiulfil that it will finance itself by charging fees for services and so on and will not look to public funds for support. All these things are contemplated by the Bill as it is and this seems to us to be a worthy way to contemplate the new Agency.
One would hope, as the hon. Member for Colne Valley (Mr. Wainwright) has just said, that if the Agency is a success and sets about its tasks with some urgency, perhaps after five years its continued existence in the form that we contemplate may not be necessary. It might be useful to set some limit on the life expectancy and make it justify itself after a time to see whether there is a case for its continuance. The five-year limit may be an artificial one, and the result of the amendment being carried might be that in five years' time an Act of Parliament would have to be passed to enable the Agency to continue its existence. The amendment might be looked at again in another place, of course, but if the Government want to resist the amendment, I hope that the Minister will reassure us that they con-

template a strictly limited role for the Agency, and that they see it as fulfilling an advisory role. It may be worth bearing in mind that it might have fulfilled its purpose after a few years, or that it migt need to be recast in a quite different way. I hope that we shall have the Minister's assurance that there is no intention to set up a large body which will have a timeless, self-fulfilling existence, or which will have a tendency to grow, in terms of Parkinson's Law, as happens with far too many of these bodies in other areas.

The Minister of State, Department of Industry (Mr. Alan Williams): I must resist the amendment, as I did in Committee. I draw the attention of the House to the fact that the working party recommended that the three-year experiment was the appropriate experiment and that the finance had been geared to the presumption of a three-year existence initially, with the Agency's position then to be reviewed in the light of the experience in those three years.
I emphasise to Opposition Members that the co-operative movement lays great importance on having a statutory base for the Agency. What worries me about the amendment—other than the fact that the period of five years is arbitrary, although I accept that equally three years would be arbitrary—is the very important fact that by taking no action whatsoever the Government could actually bring about the demise of the Agency. If the amendment were to be carried, the Government would need to do absolutely nothing and at the end of the fifth year the Agency would go out of existence as a statutory entity. It would need a positive action to secure its survival.
For that reason, I am sure that it would be far more encouraging for those who operate the Agency that there should not be an apparent death sentence hanging over it. I accept the genuine motives behind the amendment, but I hope that the hon. Member for Colne Valley (Mr. Wainwright) will feel able to withdraw it.

Mr. Richard Wainwright: I am disappointed that the Government should take the line that after five years of what I hope will be very valuable work the Agency would not be able to survive without a statutory base. That seems


to be a fundamental misconception of the future of the Agency. After five years of special or rather privileged treatment, to which it is fully entitled, surely it should by then be able to stand on its own base.
I do not accept the implication of the Minister that, simply because its statutory base may end after five years, the Agency itself will end. In the pluralist society in which we rejoice in this country some of the most valuable bodies have an extremely flourishing existence without any statutory base whatever, and they would not wish to have a statutory base. I am not convinced by the Government's argument but, in the hope that the matter may be attended to in another place, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Ivor Clemitson: I beg to move amendment No. 2, in page 1, line 8, leave out subsections (2) and (3) and insert—
(2) The Agency shall consist of a Chairman and not more than seventeen other members.
(3) The chairman and not more than eight other members of the Agency shall be appointed by the Secretary of State, after consultation with persons appearing to him to represent the interests of the Co-operative movement and one each of the remaining other members of the Agency shall be appointed by each of the bodies listed in Part II of the Schedule to this Act subject to the confirmation of each such appointment by the Secretary of State:
Provided that the Secretary of State shall at no time appoint a member of the Agency if by so doing the number of members appointed by him exceeds the number appointed by the bodies listed in Part II of the Schedule to this Act.".

Mr. Deputy Speaker (Mr. Bryant Godman Irvine): With this it will be convenient to take the following amendments:
No. 3, in page 1, line 21, at end insert—
(7) The list of bodies in Part II of the Schedule to this Act may be varied by order of the Secretary of State made by statutory instrument.
(8) An order made under subsection (7) above—

(a) shall not be made unless a draft of the order has been approved by resolution of both Houses of Parliament, and

(b) may be varied or revoked by a subsequent order under this subsection.".

No. 24, in page 5, line 1, after "Schedule" insert "Part I.".
No. 25, in page 5, line 5, after "appoints", insert "or confirms the appointment of".
No. 27, in page 7, line 21, at end add—

"PART II

The Credit Union League of Great Britain

The Co-operative Housing Agency

The Co-operative Production Federation Limited

The Co-operative Union Limited

The Co-operative Wholesale Society Limited

The Federation of Agricultural Co-operatives (U.K.) Limited

The Industrial Common Ownership Movement.

The National Federation of Credit Unions.

The Fisheries Organisation Society Limited.".

10.30 p.m.

Mr. Clemitson: Amendment No. 2 and the related amendments are in line with the proposal contained in the minority report of the working group that half the membership of the Agency should consist of persons appointed by various bodies in the co-operative movement. I remind the House of the reasons that the authors of the minority report gave for their proposal. They said:
Our colleagues"—
that is their colleagues who signed the majority report—
have recommended that the CDA should not only be a statutory body, but a statutory body with all the members being appointed exclusively by a Secretary of State.
These colleagues have laid great stress on the fact that a major purpose of a Co-operative Development Agency would be to speak with authority for the Co-operative Movement as a whole, especially to Government.
We find it difficult to see how a body on which co-operative organisations are refused the right to appoint their own representatives direct, can claim to speak on behalf of the Co-operative Movement.
That seems to be a pretty strong argument. They go on to say that a body constituted in the way proposed in the Bill would follow the pattern of East European countries where the nationally recognised co-operative organisations are appendages of State bureacracy. Perhaps their language is a little flowery and perhaps they are going a little far there, but their point is valid. We do not want a Big Brother State. We want power to be diffused in society.
I argued on Second Reading that there is an increasing plethora of organisations in which the members are appointed by various Secretaries of State. I have grave reservations about this increase of patronage. If we are to break out of this pattern of patronage, surely this, above all, is the occasion to do it. How can we, in logic, have a Co-operative Development Agency which, in its constitution, does not reflect co-operative—that is democratic—principles?
The third argument of those who signed the minority report is that the half-and-half constitution contained in their report and in the amendments reflects a partnership between the State and the co-operative movement. Lord Oram has written a paper "The Case for a Co-operative Development Agency" which is quoted in the minority report. He says:
The nation as a whole is faced with the fact that there are serious current problems in industry, commerce, housing and services for which co-operative solutions seem to be valid. Therefore, society at large, and consequently the State, has an interest in applying Co-operative Principles to the solution of these problems. This process cannot await a slow development comparable with the first century and a half of co-operative development on a voluntary basis. Progress needs to be much more rapid. Resources need to be marshalled on a very different time scale than hitherto. Therefore what is required is a partnership between the State and the co-operative movement. The State can provide the basis on which voluntary activity can effectively grow.
The argument that the authors of the minority report make and that I am making is that the half-and-half constitution reflects the sort of partnership to which Lord Oram was referring.
Of course, there are counter arguments to my case. They are set out in paragraphs 27 and 28 of the majority report. I want briefly to deal with those counter-arguments. The first is that an elective system would have to be weighed to allow for
the immense disparities amongst constituencies".
Those are the words of the authors of the majority report.
I believe that that is profoundly misconceived. Surely the main thrust of the argument for a Co-operative Development Agency is to develop co-operatives. This is in the very title of the Agency. What

is more, it is to develop them in precisely those areas where co-operation so far has been underdeveloped, of which the most obvious is the producer or industrial sector. Therefore, in my view it is right that at this stage bodies in that sector should have a voice greater than their numerical strength might appear to justify. As I understand it, the Co-operative Development Agency is to be not merely a body representing co-operation as it is but, as its name implies, an agency to develop co-operation.
The second argument is that a Government-appointed body would provide an effective safeguard against the domination of minorities by majorities. My first answer to that argument is that what we are proposing in these amendments is precisely an effective safeguard against such domination of minorities by majorities. It is only if the misconceived proportional representation argument is used here that there is difficulty.
The majority report goes on to argue that if they were appointed people would be freer to act in a personal capacity. That really seems to be having one's cake and eating it, too.
The third argument is that if the governing body were to be representational in whole or in part, it would be too big and unwieldy if it were not wholly appointed. I admit that in these amendments we are proposing a body with a membership of 18. But I recall that the Cabinet is a little larger than that, and I am told that it has to deal with considerably more matters than a body such as the Co-operative Development Agency will have to deal with.
The fourth argument is that if the Agency is appointed by constituent bodies, the members would be too concerned with the protection of the separtae interests of the participating organisations. But, of course, there is an exactly opposite danger of members of the Agency becoming too remote from the organisations which go to make up the co-operative movement. It seems to me that a half-and-half solution such as the one we offer here would be a pretty good antidote to both dangers.
Amendment No. 2 provides for a larger Agency to allow for the half-and-half representation which is provided in our proposed subsection (3). The effect of that


subsection is that nine members—a chairman plus eight—will be appointed directly by the Secretary of State, and nine by the bodies named in the Schedule. The effect of the last sentence,
Provided that the Secretary of State
and so on is to ensure as far as possible that the 50–50 balance between those appointed directly by the Secretary of State and those appointed by the nominating bodies is maintained.
The schedule lists the bodies which would have the right to make appointments. The obvious question is, why those bodies? The answer is that they were the ones invited to participate in the work of the working party and, therefore, can be taken as reasonably representative of the co-operative movement.
Then it might be asked, what about bodies which are not named? Of course, people from those bodies are not precluded from membership. The Secretary of State may bear their claims in mind when making his appointements. We provide in the proposed new subsections (7) and (8) for the list to be changed by order. That means that change could be made relatively simply, but with the safeguard of parliamentary consideration and approval.
The other two amendments are purely technical and consequential.
To sum up—we are setting up a Co-operative Development Agency. I think thae we are all at one in wanting to see co-operation grow and develop and become a much greater part of our economy and our society—not only in the consumer sphere but elsewhere. The arguments both of principle and of practice lead to an at least partly representational body. That is the purpose of the amendments.

Mr. Alan Williams: I agree with my hon. Friend the Member for Luton, East (Mr. Clemitson) that we all want the Agency to be successful. All of us on this side—I think that is understood by hon. Members opposite as well—have a commitment to the co-operative movement to produce such an agency. That is a long-standing commitment and this is an attempt by the Government to fulfil that pledge.
The Government are in something of a quandary in fulfilling that pledge in that there are many forms that such an agency could have taken. When I was given the responsibility for advising a format, it seemed to me that the worst thing I could do was to appear to impose a format on the co-operative movement. For that reason, I deliberately avoided the normal pattern of establishing an inter-departmental official committee to bring forward proposals based on consultations, and virtually present a Government production to the co-operative movement.
It seemed to me that, with the inevitable differences of emphasis which must arise within the movement, that would almost guarantee that every section of the movement would find something wrong with the proposals which came forward from the Government and looked as if they were being imposed by Government.
For that reason, I sought the advice of hon. Friends who have been influential in the co-operative movement over many years. I decided to set up a working party, not an inter-departmental committe, on which would be represented as many of the organisations as possible, to reflect the varying potential of the movement.
It was on the advice of hon. Members that I made the selection of the list. I think that we may have done reasonably well, in as much as my hon. Friend has seen fit literally to reproduce that same list in the amendment to the schedule.
Perhaps I could say something about the way in which the working party decided on this one controversial issue. This was the major issue which arose between the majority and the minority. When it was clear that the working party was deadlocked on the matter, I took the chair to see whether it was possible to establish some common ground. We were so determined that the movement itself should find its own solution that the officials withdrew from the working party for that discussion and left it to the movement itself to discuss the matter openly and democratically.
Therefore, the majority report which emerged was produced by the very grouping which my hon. Friend is putting forward in his amendment. The majority


of that grouping said that they preferred the Government's format. It was their choice and not my choice. It was their choice and not my imposition. There was a majority report and a small minority report. It appeared logical for the Government to accept the recommendations of the majority.
10.45 p.m.
I realise that there may be differences in the importance of the various value judgments contained in the report. There was a strongly expressed feeling by the larger organisations that if individual organisations were to nominate they, the larger organisations, should have representation reflective of their size. Even if we had taken the route that my hon. Friend wishes and which the minority group wished, there would still have been contention. Some of the major elements within the movement would have complained that they did not want that form of representation.
If we had tried to compromise by doing that which my hon. Friend asks, but then reflecting various wishes with what he calls proportional representation, the committee would have been dominated by the large groups. In fairness to them, it should be said that they did not want to see that form of representation. However, the committee would have been dominated by the larger groups. For obvious reasons it would have had to be larger than the 17 that my hon. Friend has suggested.
Furthermore, the working party indicated in paragraphs 27 and 28 that it felt that if we pursued the route proposed by the minority, we should end up with a series of mandated delegates.

Mr. Clemitson: No.

Mr. Williams: That is the view put forward by the working party. It said that members appointed by the method put forward in the Bill would be "freer to act". It felt that there would be more constraint in being nominated members of the individual groups with the knowledge that in so far as anyone wandered away from the mandate of his nominating group his membership could quickly be brought to an end by that very group.
It was agreed in our initial discussions that the Agency should make an

impact quickly. We do not want it to make a soporific start, It must be a dynamic Agency from the outset. In paragraph 22 the working party states:
The Agency is a body which can act".
It wanted a body that could act. Regardless of the parallel with the Cabinet—there may be some hon. Members who do not think that the most encouraging parallel on which to draw, regardless of whichever Cabinet happens to be in office at any one time—I take the view that a body of the size envisaged in the amendment, and even more so when we consider a body of the size that would probably be necessary to get a reasonable compromise because of the clashes that potentially exist, would be too large to act effectively. For these reasons we chose to work with the majority report. It seems to be a reasonably democratic way in which to present the Government's proposals.
There is always a fear about lack of independence when there are nominations made by Governments. In my previous manifestation as a Minister in the Department of Prices and Consumer Protection we set up the National Consumer Council with Michael Young as the chairman. Whatever may be said about the Council, I do not think that anyone would accuse it of being the lapdog of the Government. It has shown that it is possible for Government nominated organisations to act with absolute independence of the Government generally and of nominating Ministers in particular.
I reassure my hon. Friend and his supporters that it is not the Government's wish to tell the co-operative movement how to run its own business. If the Agency wants to make recommendations in the light of its experience, from my reading of the Bill it is manifestly free to make such recommendations. Therefore, if, towards the end of its three years, having had experience of operation, it finds that the format embodied in the legislation is not appropriate, it is free to say to the Government "We wish to change to a different constitutional base." I should think that any Government would want to give serious consideration to such a recommendation from the Agency.

Mr. Dan Jones: And in the meantime not to interfere.

Mr. Williams: I assure my hon. Friend that it is not my intention to spend the next three years—I am sure we shall be in Government in that period—interfering in the actions of the Co-operative Development Agency. It is for the Agency to establish its own fortunes and future.
If, during this period, the Agency finds that the format embodied in the Bill, which has been recommended by the co-operative movement itself, is not appropriate, it can say so, and I readily give the undertaking that it will be given serious consideration by the Labour Government in future.

Mr. Kenneth Clarke: I have no wish to delay the House by discussing an amendment about which the Opposition, on consideration, have reached the same conclusion as the Government and support what the Minister has just said.
We considered this point as it was obviously the major controversy in the working party's report. Amongst our first reactions there was considerable sympathy with one of the propositions put forward by the hon. Member for Luton, East (Mr. Clemitson)—namely, that it could be an advantage if the patronage, which at the moment resides entirely in the Government, were in some way put out to the groups which had a direct interest in the subject matter of the Agency's work. Anything which reduces the number of these bodies and the unfettered ministerial patronage which exists in so many of them is in principle probably a good thing. But there are considerable difficulties in this instance, as are set out in the majority report.
It is plain that there is considerable disparity between the various elements within the co-operative movement, including considerable disparities of size. No one, including members of the movement, wants this body to be dominated by the large wholesale and retail movement. But it would be unfair if the amendments were adopted, because they in no way reflect the comparative strengths of the different bodies set out in the proposed amendment to the schedule.
There is also the danger that the Agency may become a rather useless committee, including a negotiating committee, representing various slightly different interests in the movement. That

is a danger if the members of the Agency are in effect nominated mandated representatives of different bodies. The bodies set out in the proposed addition to the schedule have rather different interests and somewhat different opinions about the way in which the co-operative movement should develop. I am sure that no serious clashes would arise, but it would be a weakness in the work of the Agency, because there would be tendency among members to feel obliged to represent the interests of the bodies which had nominated them.
We do not want the Agency to become a lobbying group for existing co-operative institutions only, though we hope that it will serve them. We want it to be innovative, flexible and representative of the interests of the co-operative movement as a whole and, in addition, to look for and encourage new forms of co-operative activity.
For those reasons the Opposition are in the happy position of agreeing with the Minister's conclusions. Therefore, I ask the hon. Member for Luton, East to withdraw his amendment. Obviously, this is a serious point and it is right that it should be considered, because it was the major difficulty that the working party had to resolve.

Mr. Pavitt: I promise not to delay the House unduly, but I am very much in sympathy with the argument put forward by my hon. Friend the Member for Luton, East (Mr. Clemitson) and with the minority report.
I want to emphasise the point made by my right hon. Friend in the undertaking that he gave that the development of the Agency, which is a new body which will have a number of pioneering activities to carry out, will, after the initial stages, be reviewed. The recommendation for a much stronger democratic content of the governing body came from the newest, not the oldest, part of the co-operative movement. Trying to make changes against the establishment is difficult. Nevertheless, the co-operative movement has become less responsible and responsive to its members in the last 10 years. Because of technical difficulties, which I understand it has needed more and more to have technical expertise at the top and less contact at the bottom.
I accept my right hon. Friend's thesis but I hope that the development of the Agency will involve a working party for the first two years. I hope that a small group will do a job of work instead of a large concourse of people discussing the various issues.
I hope that as the Agency develops the basic democratic philosophy described in the minority report will gradually emerge. I hope that when it is succesful, as all hon. Members hope it will be, there will be the opportunity for greater democratic contact and feedback. I have no doubt that my right hon. Friend would appoint only a person fully steeped in and imbued with co-operative principles and with its confidence early on. I hope that the organisation will not be static but it will grow. I hope that in that growth the democratic content will be strengthened.

Mr. Clemitson: It would be untruthful to say that I was convinced by the arguments of my right hon. Friend and the Opposition spokesman. However, I see the need to get the Agency off the ground as quickly as possible. I hope, as does my hon. Friend the Member for Brent, South (Mr. Pavitt), that it will act as a working party in the first two or three years. I also hope that, however deeply the Agency is involved in the day-to-day business of encouraging co-operation and getting it off the ground, it will find time to reconsider the arguments that the authors of the minority report advanced.
I welcome the assurance of my right hon. Friend that, if the Agency thinks after several years of operation that the basis of its constitution should be changed in the direction which we have proposed this evening, the recommendations will be taken seriously by the Government. I also hope that further time will be found in the House to consider these matters. I hope that after two or three years we can have a major debate in the House to consider the work of the CDA and its constitution.
In the light of what my right hon. Friend has said, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 2

FUNCTIONS OF AGENCY

Mr. George Rodgers: I beg to move Amendment No. 4, in page I leave out lines 23 and 24 and insert—
'(a) to promote co-operative principles.'.

Mr. Deputy Speaker: With this we may discuss Government Amendments Nos. 5 to 12.

Mr. Rodgers: I contend that Clause 2 (a) is not capable of implementation. How on earth can a body which is appointed by the Secretary of State represent anything but the Government's view? Yet, according to the clause, the functions of the Agency will be
to promote the principles and represent the interests or the co-operative movement.
Clearly, the objective defined in the Bill cannot be attained and it would be more accurate and honest to debate the lines in question and to redefine the Agency's functions as being simply to promote co-operative principles.
11 p.m.
I have never been particularly enthusiastic about appointed bodies. There is sombre evidence of the folly of such bodies. Many of us would feel less resentful of the activities of the regional water authorities, for example, if they contained an elected element.
Our nation devotes a great deal of time to advocating democracy. We are inclined to make bellicose noises about those countries that have the audacity to operate a different political system. None the less, we are aften remarkably reluctant to apply the democratic process ourselves when the opportunity occurs.
The proposed Agency is entirely undemocratic. Every member of its is to be appointed by my right hon. Friend the Secretary of State. No proportion of the total membership is to be elected. Plainly, it cannot represent the interests of the co-operative movement unless it freely emerges from that movement.
I await my hon. Friend's comments on the amendment. I should be prepared to withdraw the clause in the light of a commitment by him to meet this situation.

Mr. John Tilley: I support the amendment and the clause


on the functions of the Co-operative Development Agency. I do so, first, because the Agency is particularly relevant and important to my constituents, secondly, because I represent here both the Co-operative Party and the Labour Party, and, thirdly, because, in view of the current parliamentary situation and the votes this week, I think it better to get a maiden speech in while I still have time.
In doing so I begin the difficult task of trying to fill the gap left by my predecessor, Marcus Lipton. He was one of those rare Members who managed to gain and keep for more than 30 years the respect and affection of the House and his constituents. He was in many ways a Front Bencher of the first rank, someone who regarded a seat in this Chamber not as a springboard to office but as a platform from which he was privileged to defend the interests of his constituents for the many years that he was here.
In my conversations with me he prided himself on being a House of Commons man. Sitting here during the last few weeks I have thought many times how much he would have wanted to join in some of the recent debates. As someone who fought to save the old English "tanner", he would have relished the fight to save the old English mile, even though it would mean crossing swords with the not so old English Secretary of State for Transport.
As the Member who in this Chamber named Kim Philby as the third man and then had to wait eight years before he was shown to have been right, he would have appreciated the point made in our debate last week about privilege—that very often the most effective and historic use of privilege is made when a great majority of other hon. Members feel that it is being misused.
But he was perhaps best known for his ability to espouse outlandish causes. The most famous of those was his idea that the backsides of the cows in Epping Forest should be painted with luminous paint to enable motorists to avoid them.
I think that the sacred cows of British officialdom would have needed a lot more than luminous paint to avoid frequent collisions with Marcus Lipton. He revelled in his skill as a debunker of pomposity and a fighter against red tape.

Of course, bashing the bureaucrats is a fairly easy occupation in British public life, but Marcus Lipton's great gift was his ability to debunk himself, to laugh at himself if ever he showed any sign of too-great self-importance.
The best example of this was when the constituency's local paper, the South London Press, asked him a few months before he died why he was going to retire. He said that he had gone into a pub in Brixton and he had overheard two pensioners complaining about something and saying "If Marcus Lipton was alive they would not be able to get away with it." But it is very much my job to ensure that they still do not get away with it.
I represent a constituency that has many problems. It is no coincidence that when the last Government studied the problems of the inner cities they chose Lambeth for their major study in London and that when this Government announced their inner urban policy, the only borough in London to have an exclusive partnership arrangement was Lambeth. The statistics speak for themselves: 3,000 unemployed in the constituency; 18,000 on the housing list of the borough of which the constituency forms a part; an infant mortality rate 25 per cent. above the national average and 17 per cent. of families have only a single parent.
The people of Camberwell, Brixton, Clapham and Stockwell, which make up my constituency, are not demoralised by all these problems. They did not send men here to Westminster to organise a weep-in for the inner cities, with a handkerchief in one hand and a begging bowl in the other. It would be disastrous if the cities of Britain became yet another depressed region competing for a slice of the regional aid cake. We want some Government help, particularly with social problems. Our problems and the statistics I have just outlined justify that, but we want also to help ourselves. That is why the Bill and the Co-operative Development Agency are so important.
The inner cities of Britain desperately need a revival of their local economies, the creation of jobs, the creation of demand, and the creation of wage packets rather than giro cheques. Large private enterprise manufacturing firms which


began their lives in the inner cities have been taken over, often by multinationals, and have moved out to green field sites at home or abroad leaving former employees jobless, without any alternative work.
We are not content to sit back and wait for a general economic upsurge to bring investment back to our areas. We look now to small firms with local roots to provide jobs. We want to help existing firms to be encouraged to expand. We want to start new ones.
The ideal form of small local firm with local roots, harnessing local knowledge, enthusiasm and commitment, is a co-operative created and owned by local working people. The problems that workers in many small firms face—unnecessarily low wages and poor working conditions—are automatically solved. The workers in a co-operative cannot be tempted away to a green field site, nor become asset strippers, because the only assets they have are their jobs and their determination to keep them. When times are bad and the ecenomy is in trouble, they have no alternative but to stay and fight to keep their firm in existence.
In rebuilding the economy of the inner cities we want to build something better than that which was there before: greater job security; local reinvestment of profits, with industrial democracy as well as commercial viability. We want a local economy in which there is much more social ownership of the means of production, distribution and exchange.
This Bill will enable us to use the one resource which has not yet been used by any Government in reviving the inner cities: the ingenuity and intelligence of the people who live there and want to work there and to be in control of their own working lives.
I have not so far mentioned the one aspect of the constituency which is the one which most commentators mention first: the fact that one quarter of my constituents are black. The multiracial society which we have in Lambeth is not a problem: it is a strength, because from that diversity will come many of the ingredients of the solutions to our own economic problems.
I give one example very relevant to this Bill. Many of my constituents who came

long ago from the West Indies brought with them their knowledge and experience of membership of credit unions, which are a form of financial co-operative which I believe will have an important role in the Britain of the future, and in the inner cities in particular, to ensure that local financial resources are used locally and not drained away by the commercial banks.
There is a great interest in my constituency and in the neighbouring area in co-operatives in both production and housing. Some old-established ones are flourishing; some new ones are trying to get off the ground.
This Bill and the Co-operative Development Agency which it will set up will enable the co-operative movement to play its vital role in giving the working people of Britain's cities one means—and there must be many others—to fight their unemployment and to build, most importantly of all by their own efforts, a better and more equal society for themselves and for their children.

Mr. Cryer: The speech of my hon. Friend the Member for Lambeth, Central (Mr. Tilley) has given the whole House genuine pleasure. In saying this I am not simply using the form of parliamentary language for following a maiden speech. This is the first time that I have had the pleasure of following a maiden speech and of expressing sincere congratulations on the force and vigour with which my hon. Friend presented his ideas.
It is convention of the House that maiden speeches be treated courteously by all hon. Members, but I am happy in the knowledge that my hon. Friend the Member for Lambeth, Central will not be treated with the same degree of courtesy by the Opposition in future, so strong are his views and ideas. That is really one of the important tests of whether one is effective in this House. It is a great pleasure to have the victor from the Lambeth, Central by-election here and for him to express his appreciation of an eccentric character whom we all regarded with great affection—Marcus Lipton.
My hon. Friend the Member for Lambeth, Central comes from a local authority—he led it for some time—which has set a distinguished example in co-operative endeavour. Not only has it assisted in forming co-operatives and getting them


off the ground; it has also helped small businesses by constructing a flatted factory that was tenanted very quickly, and which, of itself, tended to encourage co-operation among groups of small firms in that area. That was an indication by that local authority that the Labour Party has been concerned with small firms for many years, both nationally and locally. It shows very clearly that often small firms have more to fear from big business gobbling them up than from the kindly assistance that the Labour Government have given them.
Government Amendment No. 5 seeks to deal with the point raised by my hon. Friends in Amendment No. 4. We have drafted this amendment in order to honour the undertaking given in Committee during a debate on an amendment which sought to give the Agency the function of disseminating more widely the understanding of co-operative principles. Amendment No. 5 will give the CDA the requirement to promote the adoption and better understanding of co-operative principles. This is a suitable addition to the Bill and will, I believe, satisfy my hon. Friends.
Amendment No. 6 arises from the proposal in Committee that the Agency should explore new areas and encourage new forms of co-operatives. I gave an assurance in Committee that we would seek to place this duty on the CDA.
Amendments Nos. 7 and 8 also arise from our Committee discussions. It became clear that the Bill as drafted could preclude an individual from seeking the Agency's advice unless he was specifically proposing to establish a co-operative. We considered this to be anomalous and have drafted this amendment to ensure that the Agency is able to give advice to anyone who seeks it.
Amendments Nos. 9 and 10 are consequential. Amendment No. 11 is again a consequence of our Committee discussions. We gave an undertaking to look at the possibility of emphasing education and training. We recognise that this is an important aspect of co-operative development and it is no bad thing to spell it out in the legislation. I hope also that this will satisfy my hon. Friend the Member for Glasgow, Maryhill (Mr. Craigen), who raised this matter in Committee.

Mr. Jim Craigen: I wish to tell my hon. Friend that this Government amendment is broadly satisfactory. I hope that there will be more than simply a register of the available training courses.

Mr. Cryer: I am grateful for my hon. Friend's intervention, because in Committee we attempted to meet the various matters that were raised my my hon. Friend and others.
Government Amendment No. 12 is consequential. Government Amendment No. 6 spells out the Agency's function in facilitating the evolution of co-operatives, and Amendment No. 12 requires the Agency to keep that evolution under review.

11.15 p.m.

Mr. Richard Wainwright: I wish briefly to refer to Government Amendments Nos. 5, 6 and 12. Before I do so, I should like to congratulate the hon. Member for Lambeth, Central (Mr. Tilley) on a most compelling maiden speech. He made it quite clear that he has already inherited a substantial part of the mantle of Marcus Lipton. I look forward to hearing him again at a much more civilised hour.
Government Amendment No. 5 fully implements the undertaking given to me by the Minister in Committee about stressing the educative functions and duties of the Agency. Government Amendments Nos. 6 and 12 faithfully fufil the undertaking given to me in Committee that the evolution of co-operative principles, which implies stress on the producer co-operative side, is fully embodied in the Bill. I am glad that the Minister has met the commitments he gave in Committee.

Mr. Max Madden: I wish to comment briefly on Government Amendment No. 8, but before I do so I wish to congratulate my hon. Friend the Member for Lambeth, Central (Mr. Tilley). I am a former member of Wandsworth Borough Council, and I am sure he will make a valuable contribution to our proceedings, not least on housing and co-operative matters.
The provision to which Amendment No. 8 relates refers to advice from the Agency to
co-operatives and persons proposing to establish co-operatives".


The amendment wishes to add the words
and other persons seeking its advice".
Presumably, an important part of the clause deals with existing co-operatives and we all know that the history of some of those co-operatives is not as happy as it might have been. Others have a remarkable record, not least the Kirkby co-operative in Liverpool. Will the Minister in reply make clear to the House that the Kirkby co-operative continues to enjoy support from the Government, and will he say whether we can expect an early statement on the relationship of the Government to that co-operative? There is concern about its future and a statement would be most welcome.

Mr. Kenneth Clarke: I wish briefly to thank the Minister for these amendments, because they are in response to the proposals in Committee. They are a generous response and cover most of the points raised by the hon. Member for Colne Valley (Mr. Wainwright) and others.
I should like to take this opportunity to add my congratulations to the hon. Member for Lambeth, Central (Mr. Tilley) on his maiden speech. Although he is a new Member, he is obviously experienced in politics and realises that convention demands that I should have to struggle to find something polite to say even if he had made a very poor speech. He need not feel remotely worried, because I do not feel the slightest bit embarrassed by the convention. He made an extremely competent, confident and outstanding maiden speech.
The Minister said that the hon. Gentleman will probably not be treated with quite the same courtesy by the Opposition in future. Judging by the position he has chosen to occupy on the Labour Benches, surrounded as he is by some of the bêtes noirs of the Conservative Party, I imagine that that will be the case. We were most impressed by his contribution to this debate and we shall treat him with respect.

Mr. Clemitson: I add my congratulations to my hon. Friend the Member for Lambeth, Central (Mr. Tilley) on his maiden speech, which was outstanding—certainly one of the best I have heard in my rather short time in the House. He made an impassioned appeal for the co-

operative principle to be extended and developed, and we look forward to hearing much more from him, not only on that subject but on many others.
I do not think that my hon. Friend the Minister has quite dealt with the amendment. We all agree with the first part of Clause 2(a),
to promote the principle … of the co-operative movement",
or, as it will be amended,
to promote the adoption and the better understanding of co-operative principles".
But the point at issue is what is done by the words
represent the interests of the co-operative movement".
What do they add to the Bill? How can a body appointed by the Government perform that function? Surely, in all logic only a body which itself arises from the co-operative movement, which is in some way elected or appointed by it, can perform that function. We all agree that the Agency should "promote the principles", but what do the words about representing the interests of the movement add to the Bill?

Mr. Cryer: That part of the Bill represents the view of the majority report. Paragraph 16 of the White Paper suggested that the Agency should represent the interests of the movement. The Bill certainly does not intend that it should be in any way in conflict with the existing well-organised and democratically elected organisations of the co-operative movement. That would be entirely wrong.
There are various functions attached to the Agency in representing specific areas to public bodies, including the Government. This is the area involved in this part of the clause. It simply represents a view expressed by the majority report which we are carrying into action.

Mr. George Rodgers: I had hoped—I had almost assumed—that in the glow of good will generated by the splendidly vigorous speech of my hon. Friend the Member for Lambeth, Central (Mr. Tilley) the amendment had been accepted and had slipped through almost unobserved. Apparently, that is not so.
But I can assure my hon. Friend the Minister that we shall be monitoring the position. I accept his assurances, but we do not intend to leave the matter there.


We intend to watch the situation very carefully. We expect that it will develop on a more democratic basis, but if our hopes are frustrated, my hon. Friend will hear from us again.
I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendments made: No. 5 in page 1, line 23 leave out "principles and" and insert
adoption and the better understanding of co-operative principles and to".

No. 6, in line 2 leave out "and development" and insert "development and evolution".

No. 7, in line 8 leave out "and".

No. 8, in line 9, at end insert
and other persons seeking its advice".

No. 9, in line 12 leave out "advise" and insert "make recommendations to".

No. 10, in page 2, leave out lines 14 and 15 and insert "and public authorities".

No. 11, in line 17, at end insert—
(gg) to keep under review and make recommendations concerning the training courses available to members and prospective members of co-operatives;".

No. 12, in line 18, leave out "and development" and insert "development and evolution".—[Mr. Cryer.]

Clause 3

POWERS OF AGENCY

Mr. Richard Wainwright: I beg to move Amendment No. 14, in page 2, line 31, before "The" insert
Subject to subsection (6) below,".

Mr. Deputy Speaker: With this amendment we are to take Government Amendments Nos. 15, 17 and 18 and the following amendments:
No. 16, in line 35, leave out from beginning to end of line 5 on page 3.
No. 19, in page 3, line 5, at end insert—
(6) The Secretary of State may by order authorise the Agency to exercise all or some of the powers under subsection (3) above where the Agency can satisfy the Secretary of State that such powers are required to facilitate the discharge of its functions.

(7) A statutory instrument containing an order under subsection (6) above shall be subject to annulment in pursuance of a resolution of either House of Parliament.

Mr. Wainwright: I was able just now to congratulate the Government on taking on board the feeling in Committee that the measure should expressly stress the educative and training functions of the Agency. I am sorry that at that point my congratulations must stop very short, because the Government have failed to take on board a point which was stressed in Committee, that the clause, unless it is amended, not only totally prohibits the Agency from making loans for the purpose of setting up training and educative facilities but even goes so far as to prohibit the Agency from making mere grants for that sort of purpose.
It casts a little doubt on the sincerity of the Government's purpose when they prohibit this responsible Agency from making any financial contribution to the spread of co-operative principles and training people in the carrying out of co-operative work. I very much regret that that I suspect is some kind of bureaucratic inhibition is putting this shackle round the Agency.
I do not want to over-stress this, because I suspect that out of the generosity and good-heartedness of parts of the voluntary co-operative movement—which only goes to show that things do not need a statutory basis to be effective—money will be forcoming for educative and training work. But it is a great pity that the Agency should be shackled in this way. It is to try to overcome that that I move the amendment.

Mr. Kenneth Clarke: This is a matter on which we strongly differ from the hon. Member for Colne Valley (Mr. Wainwright), because the dangers that his amendment would open up would be considerable. It is with great pleasure that we see Clause 3 as drafted, and with some surprise, because we find that the Government have provided that the Agency will not have any power to disburse grants or loans out of the taxpayers' money for the forwarding of co-operative enterprises. When one listens to the hon. Member for Sowerby (Mr. Madden) making his appeal that the Kirkby workers' co-operative should be given yet more taxpayers' money to carry on with its loss-making activities, one realises the dangers that


would arise if the Bill were amended to enable the Agency to start disbursing other people's money to unsuccessful co-operatives.
Those co-operatives that are successful, commercially viable and well founded can have access to funds on the same basis as any other commercial enterprise under the many pieces of legislation that exist for that purpose. We would not welcome a suggestion that the Secretary of State might authorise the Agency to go in for disbursements of funds to promote co-operative organisations simply because they were co-operative organisations and regardless of the other relevant factors which affect taxpayers' money going to any other commercial organisation.
I realise that the hon. Member for Colne Valley has a much more limited objective, but his amendment would go far beyond authorising the Agency to make grants for educational purposes. It would empower it to start forming partnerships engaging in commercial activities, and that would be an alarming prospect.
This group of amendments also contains Government Amendments Nos. 15 and 17, which have been tabled in response to points I made in Committee. They are attempts to meet some of the questions we raised then about the precise meaning of subsection (3), which spells out those matters which the Agency shall not have powers to do. Amendment No. 15 is a further attempt to get right the wording of the part of the bill which salys that the Agency shall not have power to acquire securities of any kind.
It was explained in Committee by the Minister that it was not contemplated by the Government in the form of the words they had chosen that the Agency should acquire share capital in any firm, company, co-operative or other commercial activity as a way of promoting that activity, and that the problem considered in drafting subsection (3) (a) was what would happen if the Agency had for a short time surplus funds that it did not want to waste in current account but to invest in some way for administrative purposes.
It it correct that, while the Agency is being prevented from subscribing to shares and stock of any kind in commercial activity, such reserve funds that it

might have at any time will now be only in local authority or Government stock which it will be empowered to hold by Amendment No. 17? If that is the case, that seems to us to be satisfactory and makes it clear that any holdings are purely for the proper safeguarding of any surplus funds that it might have for a short time.
Amendment No. 17 prevents the Agency from making
loans otherwise than by subscribing for government or local authority securities;
It seems to delete the existing subsection (3) (c) in Clause 3, which prevents the Agency from making
land or other property available for use by other persons;
Why is that provision being taken out? No one queried it in Committee as far as I can remember. I would not welcome any idea that the Agency should start making
land or other property available for use by other persons",
and I cannot see why the proscription is being dropped as a side-effect of Amendment No. 17, which is imposing limits on the Agency's power to make loans.

11.30 p.m.

Mr. George Rodgers: I should like to speak very briefly in support of Amendment No. 16. Along with a number who supported the majority view of the whole working party, and certainly the wide opinions of those who produced the minority report. I am convinced that the financing of the CDA is totally inadequate. The majority of those who took part in the deliberations believed that this defect could be remedied in the course of time and that the CDA would eventually become a logical and effective channel for funding suitable co-operative enterprises.
As the Bill is now drafted, it could not do so. Indeed, a major amendment would have to be made once it became an Act if the CDA were to be utilised as a conduit for money. I accept that finance will not be thrust towards the CDA at the present time, in current economic circumstances, but surely that does not mean that we should restrict the flow of financial support for ever, even when the Agency is working efficiently and effectively and demonstrating that it is a valuable avenue of industrial investment.
We are too cautious by half. It has taken four long years for the legislation to make its appearance and I am anxious that we should not suffer another four years of waiting before the measure can play a wider and more useful role in generating prosperity. I do not see why the Bill should contain the list of provisions in Clause 3 which is designed to curtail and deny the CDA the right to make loans or grants or to borrow money. After all, the Secretary of State has absolute control over purse strings by virtue of Clauses 4 and 5.
The CDA is a bold and visionary concept. It would be a thousand pities if it were denied in future years the right to respond to opportunity because it lacked the necessary financial flexibility. I hope that the Minister will seriously consider the strength of the amendment.

Mr. Pavitt: I have followed very carefully the arguments on Amendments Nos. 14 and 19. May I ask my right hon. Friend to clarify the relationship of the powers which will arise under the proposed amendments? I apologise to him because I am in a cleft stick. There are two Bills going through the House. The Inner Urban Areas Bill will have its Second Reading, I think, on 19th May, and my right hon. Friend has been leaning over backwards to meet a number of the points which arise on the development that this Bill will provide in Clause 3 and which are affected by some of the amendments now before the House.
I received only yesterday the Press release of my right hon. Friend the Minister for Housing and Construction in which he said of the other Bill that it will,
along with other action the Government have taken
—meaning this Bill—
be particularly useful in helping small firms, including producers and workers co-operatives
inner urban areas and at local level.
Arising from this short debate, will my right hon. Friend tell us more about the way in which the powers in the Bill and these amendments could affect the possibility of a much stronger use of the CDA at local level and of its being able to participate in local authority matters?
I congratulate my hon. Friend the Member for Lambeth, Central (Mr. Tilley) on his speech. My hon. Friend the Member for Luton, East (Mr. Clemitson) said that it was one of the best speeches he had heard in his short period in the House. It was one of the best speeches that I have heard in a long period in the House.

Mr. Stanley Newens: I should like to begin by offering my congratulations to my hon. Friend the Member for Lambeth, Central (Mr. Tilley) on his splendid speech. I had the pleasure of working for him during the election campaign, and I think that, by the way that he has addressed the House this evening ha has amply justified our confidence. We all look forward to hearing him on many occasions in the future.
I am very glad that my hon. Friend the Member for Luton, East (Mr. Clemitson) and my hon. Friend the Member for Chorley (Mr. Rodgers) have tabled Amendment No. 16, which touches on the issue of whether the Agency should be deprived of all powers to make loans and grants. I agree very much with the words which my hon. Friend the Member for Chorley has addressed to the House this evening.
In the period of the genesis of the concept of the Co-operative Development Agency in the late 1960s everybody concerned with the issue took the view that such an Agency should be able to dispense funds to assist the development of appropriate co-operative projects. Everybody argued that it was essential that it should be provided with precisely the powers which this Bill takes away from it from the outset.
It remained the situation right down to the last year or two that the proposed Co-operative Development Agency should have funds—right until the moment when the implementation of the pledge made in the Labour Party manifesto was considered by the working party. It was very unfortunate that its terms of reference excluded the possibility of making funds available. I believe that that was a mistake, as I said during the course of the Second Reading debate.
Bearing in mind that the Government had introduced a Bill which might have been omitted from their timetable and


also bearing in mind the present disposition of forces in the House, I am prepared to accept the situation at the present time, but I want to place it on record that I do not regard it as a situation that we should accept indefinitely when the opportunity presents itself in the future, as I am sure it will, for us to amend the measure on a future occasion.
There was no reason, even in these circumstances, for the Government and for my hon. Friends to go to such extreme lengths to exclude the possibility of altering the Bill in future and excluding the possibility of making loans. In these circumstances I regard it as extremely important that it should be placed on record once again that, while the Bill is very welcome, it is a weakness that the Agency should not have the power to disburse funds. I believe that if the amendment were carried it would strengthen the Bill.
The hon. Member for Rushcliffe (Mr. Clarke) used the opportunity of this short debate to take a side-swipe at the Kirkby co-operative. He said that the Opposition were opposed to using other people's money for subsidising loss-making activities. I point out to him that he would not make such a comment about using public money—"other people's money", as he termed it—for supporting all loss-making activities, particularly when those loss-making activities are carried out by private enterprises. In my view, he would be quite right not to make such a recommendation, because all of us must recognise, at a time when unemployment has reached its present proportions, that it is frequently necessary that public money should be put both into private enterprises which temporarily are making losses and—I would argue—forms of socially owned enterprises, including co-operative enterprises such as that of Kirkby.

Mr. Kenneth Clarke: Of course we accept that occasionally there are circumstances in which public money has to be put into commercial activities of one kind or another, including private enterprise companies. When we have the debate on the increased limits under the Industry Act in 10 days' time we shall demonstrate again that we think that far too much public money is going into industries in that way at the moment.

But in so far as money is disbursed it should go to all activities on the same basis, and Kirkby, Meriden, and so on should have access to funds only in circumstances in which any of the commercial enterprise would have access to funds. In fact, Kirkby has been given large sums of money which would not have been given to any other enterprise, quite against the advice of the Industrial Development Advisory Board, and for purely political reasons. It is a great waste of taxpayers' money to put so many millions of pounds into a small unsuccessful firm of this kind.

Mr. Newens: This is not the occasion to thrash out this matter in detail, but it is wholly wrong and unfair for the hon. Gentleman to be so deeply prejudiced against co-operatives such as that at Kirkby. We know that some co-operatives sometimes get into diffculties for a while but, equally, there are private enterprises that get into difficulties at various times. My hon. Friends and I frequently make representations on behalf of constituents and private enterprises who seek public money to help them to continue in business. That is in the interests of the employees and the owners.

Mr. George Rodgers: It should be made clear that in many instances co-operatives have been launched from the collapse from a private company and these are hardly ideal circumstances for an enterprise to get off the ground. Against this background, co-operatives have had a remarkable record of success.

Mr. Newens: I entirely agree with my hon. Friend. I hope that the Government will take careful not of what has been said in the debate and will recognise the strength of feeling on this side of the House that Kirkby should be given adequate funds to enable it to achieve eventual success.
I realise that the Government are unlikely to accept the amendments and I would not support it in a Division, but I hope that my right hon. Friends will recognise the strength of the arguments that can be advanced in favour of providing the Agency with funds that it could dispense in the interests of creating employment and enabling successful co-operative enterprises to get off the gorund. We shall have to return to this matter. Many of us will continue to


believe that there is a strong case for doing as the amendments suggest and giving grants and loans to appropriate co-operative enterprises.

Mr. Alan Williams: The amendment introduced into the Inner Urban Areas Bill in another place is aimed at focusing the attention of local authorities on the fact that they will be able to give support not only to the more conventional form of commercial undertaking but to co-operatives. It is designed to draw attention to the opportunities that exist in this area in parallel with the introduction of the Agency which will be able to assist local authorities if they wish to investigate this course further.
I realise that the Government amendments do not go as far as some of my hon. Friends would like. They are intended to meet fears expressed in Committee that the clause was too restrictive even in terms of a promotional and advisory body, and that it might prevent the sensible use of short-terms surplus funds that might occasionally be available to the Agency.
11.45 p.m.
Our amendments have three specific purposes. The first amendment refers to subscribing. What remains prohibited is the provision of new capital. It is subscribing for issues of shares which is not permitted.
This is in keeping with our feeling, which I recognise is not shared by everyone, that the major role of the Agency, especially in its formative years, is on the advisory and general promotional side rather than in providing funds. Therefore, it will be able to use any surplus cash, if it seems appropriate, to purchase existing shares but not to provide capital to launch new enterprises, and we envisage that the sums that it would have would be fairly limited. It is obvious from the figures in the Bill that the Agency is hardly likely in these early years to be in a position where, in purchasing existing shares, it could take over any substantial firm. We believe that this just gives it slightly wider flexibility in the use of any temporarily idle resources.

Mr. John Roper: Does my hon. Friend feel, therefore, that the Agency can buy bodies corporate both

under the Companies Act and under the Industrial and Provident Societies Act?

Mr. Williams: I should need notice of that. I shall look at that and have a word subsequently with my hon. Friend and with any other hon. Member from the co-operative movement who is concerned about this aspect. If there are any unforeseen difficulties in the way in which we have framed the amendment, we shall seek to eliminate them in another place.

Mr. Tony Durant: I am slightly confused if the purpose of using the surplus funds is to buy in shares. What is the purpose of that? With the small sums of money involved, presumably there will be no opportunity to stage a takeover. What is the point of doing it at all?

Mr. Williams: It is merely meeting what was required in Committee, which is that there should be slightly more flexibility in the opportunities that are available to the Agency in placing these funds. It is up to the Agency to decide which is the best use of those funds at the time they are available. We are merely building a marginal additional flexibility into the Agency's opitions.
The same applies to loans. Although we retain the prohibition on loans for commercial purposes, it seems absurd to deny the Agency the opportunity again to place funds perhaps in local authority or Government securities for short-term objectives which might produce a better rate of interest than could be obtained from a hank. This again is a minor hut, I think, helpful, variation.

Mr. Kenneth Clarke: Now that the Minister has explained this, it may well be taken up again in another place. He has given the Agency more flexibility, but in the opposite direction to that sought in Committee. We were trying to ensure that it would have no power to acquire securities of any kind. As I understand it, the hon. Gentleman is giving the Agency a general power to acquire stocks and shares of any kind in existing companies. Will he at least confirm that it is only the intention to provide flexibility in investing small surplus funds? What does he think of the danger that, in theory, it would enable the Agency, if it is successful in charging fees for its services and in building up assets, to start


acquiring a portfolio of holdings, which would be somewhat outside the range that is contemplated?

Mr. Williams: I emphasise that certainly in the foreseeable future, even looking to a period when the Agency was self-sustaining, it is hardly likely that it will be in command of large sums of money. The revenue that it would get from fees would not be substantial and, although the hon. Gentleman says that I have responded in the opposite way to his request in Committee, he was not the only hon. Member to express a point of view and, while I may not have pleased him, I have tried to accommodate some of the sentiments put to me by some of my hon. Friends.
I was asked about the land. At first sight, it is strange to have made this change. It is not for any deep, ulterior motive. We simply discovered that in the form in which the clause was originally drafted it would have been impossible, for example, for the Agency to let its premises for a co-operative seminar. It was so ridiculously restrictive that we felt that we had to find some way of covering the normal functions that it would undertake. We think that subsection (2), with its limitation on commercial activities, ensures that it will not indulge in any of the wilder extremes that the hon. Gentleman might refer.
Turning to the amendments of my hon. Friends, I recognise that there is a genuine difference of view about the Agency's precise role. I suspect that in its first three years it will have a full time just fulfilling the functions which it is being given by the Bill. The normal financial resources, plus those which are available within the co-operative movement itself, will be available for those wishing to set up co-operative enterprises. The role of the Agency will be to link those wishing to form co-operatives into the sourees which exist, rather than to be a source itself.

Mr. Clemitson: But surely my hon. Friend's point did not relate to the situation now or to that which will exist over the next few months or couple of years, when we realise that financial resources cannot be available under the Bill to enable the Agency to make loans or grants.

The point is that the Bill as drafted preempts the future for all time. It prevents the Agency from developing into that kind of body should it wish to do so. If we want an Agency which can fulfil those functions, we should need to amend the Act. After waiting a long time for this Bill, we might have to wait a long time for an amending Bill to enable it to fulfil that sort of Function.

Mr. Williams: I have previously said that it will be possible for the Agency itself, in the light of its experience during its first few years, to recommend that any of the powers which are precluded by this provision should be available to it. If on the basis of hard experience its finds that this is a major inhibition of its activities, it will be able to make recommendations accordingly. But we feel that the appropriate time for review is towards the end of the initial three years. It may be that the hon. Member for Rushcliffe (Mr. Clarke) is right and that it will then become self-supporting. On the other hand, perhaps it will move to a fifty-fifty basis before eventually becoming self-sustaining.
But if the Agency needed any further Government finance, there would still need to be legislation at about the end of the three years. So a vehicle would be available, through Parliament, in which we could also consider powers. I suggest that we let experience show whether this is a major limitation or whether the Agency will find that there are ample sources available—from the Government, under the Industry Act, from the private sector or from sources within the co-operative movement itself. I know that the movement is already looking constructively at the possibility of mobilising some of its own finances in support of the Agency.
At this stage the advantage of pursuing what I recognise my hon. Friends regard as a rather modest course is that the Agency is to be launched in the atmosphere of the greatest good will that I can remember any new statutory body achieving, certainly on the commercial side. All the three major parties are wishing it well at the outset. There is no wish on the part of anyone to damage it. The consensus will be valuable in the Agency's early years. I recognise that after a period of operation it may be felt that changes are required, but I suggest that the initial


three years will provide an appropriate field study for us to establish whether any new powers are required.
An alternative approach could be the use of a discretion, but that would be a marked change in the role of the legislation and of the Agency. We are getting the Bill through the House with maximum co-operation from both sides of the Chamber. We all recognise that without maximum co-operation Bills can take much longer to get through the House. We are getting it through on an understanding that it is initially a promotional and advisory Agency. If we were to make a major change in its role, it would be right to do so through the statutory process.
I hope that my hon. Friend the Member for Luton, East will reconsider his position. I give him my assurance that we would consider seriously any recommendations that came from the Agency in the light of its experience in operation.
The hon. Member for Colne Valley (Mr. Wainwright) referred to education. It may be that the hon. Gentleman and I can get together before the Bill is launched in another place. If we can identify a legitimate gap that would be at variance with the promotional objectives of the Agency and if we can frame some form of amendment that ensures that those objectives are fulfilled without creating any loopholes, I am willing to consider whether an amendment is possible. I say that without commitment, because at this stage I am not sure whether that is a practical course.
I hope that on the assurance that the Agency will be able to make recommendations about its own future form and role my hon. Friends will feel able to withdraw the amendments.

Mr. Durant: Following the right hon. Gentleman's reply, I am now slightly anxious about what is happening. We seem to be in a slightly confused state.
I understand that the Agency is to have an advisory role and that it is to use its money for helping co-ops in every way possible. If it has any surplus funds, surely it should spend them in continuing and developing its advisory role. Surely it should use its money in that way and not to buy shares. There is logic in that for which some Labour Members are pressing as there is logic in not allowing any

purchases. However, we now seem to be in a confused state about what will happen to any surplus. I suggest that the Minister reconsiders this issue and introduces a tidying-up amendment in another place. It seems that we are going beyond what many of us thought the Agency was all about.
I do not support the amendment but at least it has logic. The right hon. Gentleman has resisted it but I am not sure what is to happen to the money. If an advisory agency accumulates money, surely it should provide more advisory services and not accumulate money by the buying of stocks and shares.

Mr. Williams: All that we are doing is opening up the possibility of the Agency, in the event of its having surplus short-term funds, having available to it a wide range of options, including going to the normal financial institutions, or even looking to the temporary purchase of stocks and shares. We are not contemplating a commercial gambling operation, which would be prohibited under the subsection. Alternatively, the Agency could look to the loans raised by local authorities or the Government. I assure the hon. Gentleman that it is a modest addition to a range of options for the use of idle money.

12 midnight

Mr. Durant: I am not looking for anything sinister. I am just getting clarification. The main purpose of an advisory body such as this is to be, which we all support, should be to use all the money for advisory services. However, there is a danger. Although such organisations may not mean to accumulate money, they may do so. Therefore, they may think that it is nice to have a few stocks and shares. Then they talk about having annual reports and trustees and so on. That is how these things begin. I am anxious about this matter. Therefore I urge the Minister to look at it in another place to make it absolutely clear.

Mr. Richard Wainwright: I am obliged to the Minister for his offer to discuss the possibility of some amendments in another place so that the educative and promotional functions of the Agency will not be totally shackled. It is not enough for Ministers to say that they have so far asserted themselves against the Treasury clamp on the Bill that it will


now be possible for the Agency to use its premises for co-operative seminars. That does not go as far as we would wish. However, it is a centralised concept to have seminars only at the Agency's headquarters.
My hon. Friends and I are anxious that part of the membership of the Agency shall positively reflect its educative and promotional functions. If potential members who have great experience and ability in education look at the legislation and find—I hope they will not—that they are not allowed to spend a penny on grants to bodies to assist in this work, it may discourage them from considering any invitation which might be issued. If the Government are sincere—I am sure they are—in wanting to promote the educative side of the Agency's work, there must be some modest provision for financial assistance.
I shall be glad to take up the Minister's offer. On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendments made: No. 15, in page 2, line 32, leave out from second 'to' to end of line 33 and insert
'subscribe for shares or stock'.

No. 17, in page 2, line 35, leave out from 'make' to end of line 36 and insert
'loans otherwise than by subscribing for govenment or local authority securities;'.

No. 18, in page 2, line 37, leave out 'loans or'.—[Mr. Alan Williams.]

Clause 5

ACCOUNTS AND AUDIT

Mr. Cryer: I beg to move Amendment No. 20, in page 3, line 27, leave out subsections (2) to (4) and insert—
'(2) The Agency shall send to the Secretary of State and to the Comptroller and Auditor General, before the end of the period of seven months after the end of any accounting year a copy of the statement of accounts for that year.
(3) The Comptroller and Auditor General shall examine, certify and report on every statement of accounts received by him under subsection (2) above and shall lay a copy of the statement and of his report thereon before each House of Parliament.
(4) The Secretary of State may, with the consent of the Treasury, provide by order

made by statutory instrument that from such date as may be specified in the order the provisions of Schedule (Accounts and audit: alternative provisions) to this Act shall have effect in substitution for subsections (2) and (3) above.
(4A) A statutory instrument containing an order under subsection (4) above shall be subject to annulment in pursuance of a resolution of either House of Parliament.'

Mr. Deputy Speaker: With this amendment it will be convenient to take Government Amendments No. 21 and the Government's new schedule.

Mr. Cryer: The hon. Member for Colne Valley (Mr. Wainwright) raised the question of the auditing of the accounts. Amendments Nos. 20, 21 and 22 give the alternative option. They require the auditing to be carried out by the Comptroller and Auditor General, but they give the Secretary of State the power to appoint ordinary commercial auditors at the end of, say three years if and when the CDA becomes independent.
The commercial auditor will be required to provide accounts in the same way as the Comptroller and Auditor General and the Secretary of State will be required to place these accounts before the House.
Several of my hon. Friends have raised the question of parliamentary scrutiny. Section 6(2) requires the Secretary of State to lay before each House of Parliament a copy of the annual report. Therefore, plenty of scrutiny should be available. These amendments ensure that there is a degree of flexibility about accountability which I think should satisfy the hon. Member for Colne Valley and gain the support of my hon. Friends.

Mr. Richard Wainwright: The Minister has fully met the point that I made in Committee about the audit. I salute the ingenuity with which this optional arrangement has been inserted into the Bill.

Amendment agreed to.

Amendment made: No. 21, in page 4, line 1, leave out
section and in section 6 below
and insert
Act".—[Mr. Cryer.]

New Schedule

ACCOUNTS AND AUDIT: ALTERNATIVE PROVISIONS

1.—(1) The accounts and statements of accounts of the Agency shall be audited by auditors appointed by the Agency after consultation with the Secretary of State.

(2) A person shall not be qualified to be so appointed unless he is a member of a body of accountants which is for the time being recognised for the purposes of section 161(1)(a) of the Companies Act 1948 or section 155(1)(a) of the Companies Act (Northern Ireland) 1960; but a Scottish firm may be so appointed if each of the partners is qualified to be appointed.

2. The Agency shall send to the Secretary of State, before the end of the period of seven months after the end of any accounting year, a copy of the audited statement of accounts for that year together with a copy of any report made by the auditors on that statement or on the accounts of the Agency.

3. It shall be the duty of the Secretary of State to lay before each House of Parliament a copy of every statement and report of which a copy is received by him under paragraph 2 above.'.—[Mr. Cryer]

Brought up, read the First and Second time, and added to the Bill.

Motion made, and Question proposed.

That the Bill be now read the Third time.

12.5 a.m.

Mr. Kenneth Clarke: I know that the House does not wish to have a prolonged Third Reading debate, and I do not intend to launch into one. We wish the Agency well and we look forward to a new Conservative Government working with it.
The purpose of tabling the Third Reading motion, in addition to wishing the Agency well and expressing our support for worker co-operatives conducted on commercially viable and properly organised lines, is to raise a final query with the Government about which we were unable to get an answer on Second Reading. Our query is about the way in which the Agency will conduct its work and the way in which the present Government will make use of it.
We have deep suspicions about the Labour movement—particularly the Left wing—and the present Government about worker co-operatives. I do not propose to labour again the history of Kirkby and Meriden, which I discussed on Second

Reading. We are not guilty of any prejudice against them. We feel that the Government have shown prejudice towards them by disbursing money to them on a basis which would not have applied to any other enterprise.
I wish to raise an issue which has been mentioned to me by a number of people in the construction industry. There is great fear within that industry about the Government's intentions towards worker co-operatives. I hope that the Minister can clarify the way in which the Government see the Agency operating when encouraging worker-co-operatives within the construction industry.
I raised the matter on Second Reading, and this brief debate will ensure that the Minister does not overlook it but deals with it directly. The concern arises from a document, "Building Britain's Future: Labour's Policy on Construction". This is a document put out by the Labour Party and the bulk of which contains proposals for the nationalisation of a considerable part of the construction industry. To this we are strongly opposed.
The document contains a section on worker co-operatives. Within the construction industry there is much subcontracting, and this is an area in which a number of worker co-operatives might be formed. The Labour Party's policy, as declared in the document, sets out all that we most fear in a Socialist attitude towards worker co-operatives. It discusses not only encouraging them to set up but giving them an inside track vis-à-vis other enterprises and preferential treatment which is unfair to other businesses in the industry and those who work for them.
I remind the Minister of the passage on page 43 headed "Workers Co-operatives". It states:
Trade unionists in the industry could perhaps themselves take the initiative in establishing co-operatives … and public bodies could actively assist by favouring co-operatives in allocating work.
We trust that this Government's policy is not to ask the Agency to consider any suggestion that public bodies should give favourable treatment to those trying to get public works simply because they are worker co-operatives. I hope that the Minister will take the opportunity to repudiate his party's policy document and


say that it is no part of the Government's policy and that it will not be pursued by the Agency.
If we thought that the Agency was to be a vehicle for either disbursing large sums of taxpayers' money on preferential terms to co-operatives or allowing co-operatives to compete on an unfair basis with existing small firms in the construction or any other industry, the Bill's passage through the House would have been different.
The Minister said that he was getting co-operation on the Bill and had to resist his hon. Friends' amendments in order to get the Bill through in a reasonable time. I hope he will reassure us that co-operative has been given on a Bill which will not facilitate the aim of the Socialists in the Labour Party of one day giving the co-operative movement preference.
I am glad to say that in the dog days of this Government, since they survived for no other purpose than to have a General Election and do not have a majority in the House to carry out much of their programme, they often do not carry out the Socialist aims of the Labour Party, as hon. Members below the Gangway are anxious to frequently point out. We believe that the Bill rejects all that they would wish to see the agency empowered to do. We know that a Labour Government with a majority would extend the Agency powers and enable it to make the grants and give the preferential treatment to worker co-operatives that the hon. Member for Luton, East (Mr. Clemitson) and others have just been demanding.
Will the Minister make clear that the Government will not use the Agency in any way to further the stated aims of the Labour movement of giving preferential treatment to worker co-operatives in the construction industry?

12.12 a.m.

Mr. Alan Williams: The hon. Member for Rushcliffe (Mr. Clarke) will no doubt recollect that it was not entirely in keeping with the political aims and aspirations of his party when his Government nationaling with the political aims and aspirations make pragmatic responses to pratical situations.
I have not had an opportunity to read the full document to which the hon.

Gentleman referred. I agree, as would most of my hon. Friends, however, that where co-operatives are set up they should be viable in their own right. The worst thing for the co-operative movement, as I said in Committee, is for co-operatives to be set up which have little or no chance of surviving. Their failure would damage all those potential co-operatives which could be a success.
I do not see why I should accept any lectures from the hon. Gentleman about preference in the building sector for any particular type of organisation. The Tory Party wilfully set about destroying public works departments in order to plough work into the private sector of the construction industry, regardless of the need that exists in many parts of the country for such departments. I therefore regard the hon. Member's interjection as politically mischievous and irrelevant to the Bill.

Mr. Kenneth Clarke: Do I take it from that last remark that the Minister thinks that the argument advanced from my side of the House about public works depatments justifies the Government contemplating allowing preferential treatment to worker co-operatives in the construction industry? Let me assure him that the construction industry is very concerned about this document. There are those who will mark his words very carefully about the future of worker co-operatives.
Is the right hon. Gentleman seriously saying that there is something in our policies which justifies the Government following the policy outlined in the document? It is a most important document which he should read. It commits his party to nationalising large sections of the building and construction industry. Is he contemplating giving preferential treatment to worker co-operatives? He will cause considerable alarm in the industry if he claims that he is entitled to do that.

Mr. Williams: There is nothing in the Bill that gives any preferential treatment to the co-operative movement. It tries to put the co-operative form of organisation on a similar footing to other forms of organisation. No one has intended that the co-operative firm should get preferential treatment in the construction industry. To come to such a conclusion would be a perverse reading of my words, or, rather,


the hon. Gentleman's words which he tried to attribute me.

12.13 a.m.

Mr. Roper: I do not want to continue the disappointingly sour note that has entered the final stages of this debate. My right hon. Friend the Minister said at an earlier stage in our discussions that the introduction of the Agency was unique and that it was welcomed by three parties in the House. It is probably fairer to say that on this occasion a fourth party welcomes it with great enthusiasm. I refer, of course, to the Members from the Co-operative Party in this House, who have played an active part in promoting the Bill and in taking part in the various debates on it. At certain times this evening, I think that the co-operative group would have commanded a majority over those present in the Chamber if it had wishes to bring its full numbers to bear.
Many of us in the Co-operative Party have looked forward for more than a decade to the creation of an agency of this sort, so we are particularly grateful to the Minister and to the Under-Secretary for what they have done in recent months, first to establish the working party and then to bring it to a successful conclusion, to ensure that time was found for the Bill in a crowded programme of Government business this Session, and finally to steer the Bill through all its stages in the House.
We are also grateful, in spite of the remarks made by the hon. Member for Rushcliffe (Mr. Clarke) in the closing stages, for the assistance that the hon. Member for Colne Valley (Mr. Wainwright) and the hon. Member for Rushcliffe have given in ensuring such a smooth passage for the Bill through the House.

Question put and agreed to.

Bill accordingly read the Third time and passed.

Orders of the Day — LOCAL GOVERNMENT ACT 1974 (AMENDMENT) [MONEY]

Queen's Recommendation having been signified—

Resolved,
That, for the purposes of any Act of the present Session to amend the Local Government Act 1974 with respect to investigations by Local Commissioners it is expedient to authorise any increase attributable to that Act in the sums payable out of moneys provided by Parliament under any other Act.—[Mr. Graham.]

Orders of the Day — STATUTORY INSTRUMENTS, &c.

Motion made, and Question put forthwith pursuant to Standing Order No. 73A (Standing Committee on Statutory Instruments, &amp;c.).

MEDICINES

That the draft Medicines (Radioactive Substances) Order 1978, which was laid before this House on 11th April, be approved.—[Mr. Graham.]

Question agreed to.

Mr. Deputy Speaker (Mr. Bryant Godman Irvine): In order to save the time of the House, I propose to put together the Questions on the three motions to approve Statutory Instruments.

Motion made, and Question put forthwith pursuant to Standing Order 73A (Standing Committee on Statutory Instruments, &amp;c.).

INCOME TAX

That an humble Address, be presented to Her Majesty, praying that on the ratification by the Hungarian People's Republic of the Convention set out in the Schedule to the draft Order entitled the Double Taxation Relief (Taxes on Income) (Hungary) Order 1978, which draft was laid before this House on 18th April, an Order may be made in the form of that draft.

That an humble Address, be presented to Her Majesty, praying that the Double Taxation Relief (Taxes on Income) (Ghana) Order 1978 be made in the form of the draft laid before this house on 18th April.

That an humble Address be presented to Her Majesty, praying that the Double Taxation Relief (Taxes on Income) (Singapore) Order 1978 be made in the form of the draft laid before this House on 18th April.—[Mr. Graham.]

Question agreed to.

Addresses to be presented by Privy Councillors or Members of Her Majesty's Household.

Orders of the Day — CORNISH TIN MINES (CLOSURE)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Graham.]

12.17 a.m.

Mr. David Penhaligon: This is the story of two tin mines in my constituency and some 750 jobs. The background is that in 1971 the Consolidated Gold Fields Company opened a mine not many miles from the village where I live. In 1974 a company called the Cornwall Tin and Mining Company opened one no further than a mile from the first mine, called Mount Wellington. Between them they provided some 750 jobs. In our area they were good and well-paid jobs. They were welcome and represented the whole hope in an area where unemployment is nearly endemic. The last figures I saw gave the average unemployment for my county as 11 per cent.; for men it is over 14 per cent.
I have elicited that there is not a labour exchange within 40 miles of Chacewater, the village nearest these mines, which has today a male unemployment rate of less than 10 per cent. In this area there simply are no other jobs. There is certainly not a single job on offer which pays anything like the national average wage.
My involvement with this matter started about a week or so before the first mine announced its closure when certain things I heard made me put down parliamentary Questions to find out what was happening and whether the Government knew what was happening at the Mount Wellington mine. Eventually there was a meeting in Zurich where the directors announced that the mine was to close.
No more than two or three days later the Consolidated Gold Fields company made a similar announcement that its mine also was to close. The reason given at the time by Consolidated Gold Fields was that the water which had undoubtedly been a substantial problem in Mount Wellington, pouring in at some 8 million gallons a day, would follow the laws of gravity and quickly invade its mine. The cost of pumping this water out was understood to be £500,000 a year.
I must admit that it was this more than anything else which raised by suspicions and made me decide to launch a major attack in this place to find out what was happening.
There is no doubt that Consolidated Gold could have applied for temporary employment subsidy, and, virtually at the drop of a hat, received some £420,000—at an annual rate. It would have given those in the locality some time to judge the matter and negotiate matters instead of looking down a gun barrel, as we have been doing ever since this announcement was made.
Indeed, Consolidated Gold was recruiting labour up to two weeks before its closure and I have long suspected—we shall probably never know—that the truth is that the company has been running this mine for some seven years with considerable managerial difficulties. It has had four or five managers since I have been the Member for Truro.
It is difficult to know whether mining is likely to be profitable; one never knows exactly what one will get until the mineral is dug out. Besides that, the pound is oscillating. But, for all that, last year some £6·8 million worth of minerals were produced—950 tons of tin, 3,300 tons of copper, 3,250 tons of zinc and just over 1·4 tons of silver. The value of this on the metal exchange was nearly £7 million. Besides that, it must be remembered that Mount Wellington was making its own contribution as well. These mines make a significant balance of payments contribution, especially bearing in mind the number of people involved. They have some strategic significance, too, as Cornwall has Europe's only supply of tin.
The absolutely horrifying secondary effects hardly need quantifying. The companies used outside contractors for all the painting, surface digging and building operations. They bought some £1½ million worth of supplies locally. The men themselves had a purchasing power of £2 million to £3 million.
The local reaction was swift and strong. Some 600 miners and their families came to London. They announced that they were prepared to give up next year's increment in pay—a substantial offer in these days of inflation.
The Cornwall County Council, which is not famous for throwing away money, quickly offered some £20,000 to enable the pumps to be run for a more substantial period while the problem could be studied sensibly. No wonder: in my village, if these mines totally collapse, I shall have 40 per cent. male unemployment. In the villages of Threemilestone, Crofty and St. Day the situation will be little better. The issue has not been off the local radio and television screens since it was first announced.
Cornwall has become cynical about the treatment given by the Government to its problems. Large sums of money are going to the steel and car industries. We argue that our problems are no different. This is a basic industry providing basic employment.
We hope that our treatment will be different on this occasion. Certainly I must admit that the Minister has kept me extremely well informed since this saga started. I believe that on this occasion the Government are prepared and willing to give help. I know that they are now negotiating with other parties. There are problems of confidence in disclosing exactly what is happening and during the period of negotiation it is an absolute impossibility to give a blow-by-blow account publicly.
I should like some assurances from the Minister making it clear to people in my part of the country that the local appearance that these mines are lost is not the case, and that there is real and genuine help on the way. One rescue plan mentioned is that the shafts that run from Wellington towards Wheal Jane should be plugged, and that some extra pumps should be installed in Wheal Jane to hold back the water that is bound still to leak. Obviously there would be some ancillary piping and this would cost a capital sum of some £600,000, including a considerable contingency in case some of the estimates have gone wrong. The actual operating cost increase in Wheal Jane is estimated at £100,000.
Facts in this case have been difficult to elicit, but as I understand it—and I have been assured on this point by some of those who work for the company—in the quarter before this terrible thing

happened to my county the company was making a positive cash flow. Basically the company has developed and was ready to take the ore from what is called the ninth level in that mine. It had been driving a shaft down to the fifteenth level and had in fact reached a depth of 1,300 ft.
There is now considerable anguish in the area, as the negotiations go on behind closed doors, about the company's action in dismantling some of the facilities underground. There is a suspicion that the rescue operation is getting more difficult by the hour. There is no doubt that some substantial sums of money will be required. The company, Consolidated Gold Fields, negotiated, in June 1976, a loan of £2·5 million I have never been clear why that loan was not taken up, but it was negotiated and has never been used.
Let me warn the Minister that the alternative will be the loss of 700 or even 1,500 jobs. The Department of Employment officials, in an interview, told me that if the mines closed, they might be prepared to use the area for a special temporary employment subsidy scheme. One can imagine the cost and the loss of income tax, rates and national insurance contributions.
Above all, there is the fear of living in an area with 40 per cent. unemployment and of being defeated and demoralised. Because of Cornwall's history, mining is more important than the number of jobs involved. There is all the mythology of mining—"Poldark" and the other series of which people are aware—and these mines represented in my area a feeling that there would be growth in employment. The mines were new and we welcomed the general upturn in the growth of the Cornish mineral industry.
If nothing is done about these mines, I believe that the hope of any outside investment in Cornwall is finished. There will be no hope of persuading any of the large mining corporations to come to my county. The Government, despite my opposition, have saved a considerable amount of money by scrapping regional development grants for the mining industry in development areas. Perhaps some of that money could be used to assist my county.
I wish to put a number of questions to the Minister. Where do we stand in regard to pumping arrangements? I take the view that we are still fighting this battle and stand a reasonable chance of winning so long as the pumps are kept running. Will the Minister let my constituents know precisely what are the future pumping arrangements? How hard are the Government trying to rescue the position? Will he give some idea of the progress of negotiations? I recognise the difficulties, but what progress has been made in real terms?
Will the Minister also say what will happen if the negotiations with interested parties break down? What will the Government's attitude be in that event? Will they keep the pumps going for a period while some other party may be interested in the operation? The important question to which my constituents would like an answer is "When will a decision be known?".
It is not difficult to realise the tragedy that hits a family in such an area when relatively well-paid employment is lost. One can imagine a family's feelings when its income is cut off. In the village of Threemilestone scores of workers who have taken on mortgages in the last 12 or 18 months are now wondering where they stand. They are looking to the Government because they realise that there is nobody else who can give the guidance and assistance required to rescue this mining operation. I look forward with great interest to hearing the Minister's reply.

12.28 a.m.

The Minister of State, Department of Industry (Mr. Alan Williams): I wish to congratulate the hon. Member for Truro (Mr. Penhaligon) on the way in which he has represented his constituents' interests. I know that he more than any other Member has ensured that he has kept in touch with developments and has put forward any suggestion which he felt contained a possibility of saving jobs.
I share his feelings about the plight of constituents and the difficulties that would be caused in an area such as his constituency if all these jobs were lost. He can be assured by a Welshman who has seen coal mines disappear in so many parts of my own country that we fully appreciate not just the traumatic shock

of losing an occupation—which is often a family occupation, involving grandfathers, fathers and sons—but the effect on the community in which that particular industry is based.
Because I understand the feelings that must prevail in the hon. Gentleman's area, I suppose that I have spent more time on this issue since the situation hit us than on any other—and the hon. Gentleman is aware that my Department is not short of issues that demand Ministers' time. Everything has been accelerated by the decision of the Mount Wellington owners to close their operations. As the hon. Gentleman said, they are pumping out 7 million gallons of water a day. After a short while, when that water reaches the higher levels, it goes through old workings and begins to pour into the Wheal Jane mine, which is itself already pumping 4½ million gallons a day.
The hon. Gentleman rightly indicated that what has happened to the world price of tin, but in particular what has happened in terms of the quality and quantity of tin that has been extracted from the Mount Wellington mine, dictated the decisions of that firm. Because of the link between the pumping operations, the decision of the one firm inevitably precipitated certain decisions for the Wheal Jane operation.
As soon as we were told that the two firms were contemplating closure we entered into discussions with them to try to establish any organisation which would give a chance of survival and viability for the two mines or for either mine. We were willing to support either of the firms or both, or one of the mines or both. There was virtually no option we were unwilling to look at, except the possibility of 100 per cent. Government funding.
I am sure that most hon. Members will accept that it is very difficult for the Department to accept an offer which suggests that the Government pick up all the bills and that should there eventually be any profit someone else takes it but retains the right to close the operation at any time suitable to him. This would not give security to the workers of Cornwall, because they would still have the threat hanging over their heads.
Therefore, far from the Government's refusing financial support, as reported


in some newspapers, and even on the BBC this morning, we have made it clear that financial support is available. As the hon. Gentleman pointed out, £400,000 a year of temporary employment subsidy could be available in the case of one mine alone. There is assistance available under Section 7 of the Industry Act. But it is a requirement that in giving that assistance we give it for a project that eventually will become viable. One of our difficulties has been that the two companies currently operating have each reached the conclusion in relation to their own operation that it is non-viable in its present form.
This does not preclude—and this is what we are pursuing—the possibility of alternative methods of working. It does not preclude the possibility of its being saved by other owners. As the hon. Gentleman rightly suggested, it is very important to Government to observe confidentiality. Indeed, we have had specific requests from the parties that we are negotiating with that we do not mention their names. I can understand that, and we must respect their wishes.
The negotiations are still continuing. The companies are having evaluation work done, assessing the prospects of the mine. I do not want to hold out false hopes at this stage, but the fact that we are all still working at the matter at least indicates that there is some hope, though I do not pretend that it is great hope.
It has been suggested that one could flood the old workings of the Mount Wellington mine, but it has been made clear that this is not a guaranteed solution. I believe that it is not unfair to say that Consolidated Gold, for example, is far from convinced that that would be a successful formula, if the flooding worked, there would be a £650,000 initial cost, as compared with a running cost of £500,000 a year for the pumping operations.
Up to now, we have not ruled out either solution. We have indicated that we are willing to finance the pumping operation in the Mount Wellington unit certainly for another week. I made an offer to finance it for a month. It is unfair to say that the offer was turned down, but Consoli-

dated Gold felt that it would prefer to finance the first week. It was its decision, not ours. I have assured the parties to the negotiations that it is our intention to try to keep pumping operations going while there is a chance of negotiations being meaningful and successful.
I have therefore committed the Department to financing another week's pumping in the Mount Wellington unit, and the Cornwall County Council has generously indicated that it will finance the pumping operations for the Wheal Jane unit. So the flooding hazard at least will not precipitate the collapse of the negotiations.
There have been suggestions—the hon. Gentleman has heard the rumours—that certain items were being removed from the Wheal Jane mine which would make it virtually impossible for that mine to reopen, certainly in the short term. I pass on the assurance that we have received. We have been assured by Consolidated Gold that it has no intention of removing essential equipment from the mine while there is a possibility of a successful conclusion to the negotiations.
Indeed, only today, as a result of the hon. Gentleman's discussion with me, I sent my regional industrial director to the mine to see for himself rather than just rely on reports. He discussed the situation with the local management. We have had an assurance that nothing critical to the future of the mine will be removed and also that nothing critical to its future has been removed.
The Government remain willing to help. Government finance is available, but it has to be for realistic projects. It has to be on the basis of a project that offers the possibility of viability. I would not expect conclusions within a matter of days. I think that the type of negotiations going on will certainly take most of next week because a considerable amount of evaluation and financial negotiation and calculating has to be undertaken. But I will, as far as confidentiality permits me, keep the hon. Gentleman informed. As he knows, I am flying to America tomorrow, but I have left instructions that I am to be kept informed of all developments while I am away, and I will ensure that the hon. Gentleman has all the information that we can give him during the next week.

Mr. Penhaligon: I thank the Minister of State for that reply. Can he say a few words about the guarantee of viability? There are so many moving ends in a tin mine that I suspect that one decides whether it will make a profit or loss before one does the accounts. One does not know what is round the corner. What does the right hon. Gentleman mean by "guarantee of viability"? Certainly a viable situation ought to be credible. But what does "guarantee" mean in this rather unusual context?

Mr. Williams: That is a fair point. Obviously, in something like mining one can never have absolute guarantees, be-

cause one only needs to get one rift and one has lost one's chances of viability.
When a project is put to us, we assess it to see whether there is a reasonable prospect of viability being achieved, not necessarily in the first year. We usually look at about a three-year period to see whether viability could reasonably be attained on the basis of that project within about three years. If it could, we would then feel that it met the criteria which Government apply.

Question put and agreed to.

Adjourned accordingly at twenty minutes to One o'clock.